Ghana’s 2026 Budget Faces Execution Risks Despite Improved Fiscal Outlook – EY Warns
By Praisebell Rosemond Larbi
Accounting and advisory firm Ernst & Young (EY) has welcomed Ghana’s stronger macroeconomic performance but cautions that the success of the 2026 Budget will hinge on disciplined execution, improved revenue mobilisation and tighter control of expenditure commitments. The firm’s assessment follows an extensive post-budget analysis that highlights both progress and persistent structural risks.
According to EY, Ghana has made notable strides in stabilising the economy under the IMF program, with declining inflation, a stronger fiscal balance and improved investor sentiment. Inflation is projected to ease further to 15% in 2026, while the fiscal deficit is expected to narrow from 3.9% of GDP in 2025 to 3.5% in 2026. The primary balance is also forecast to improve from a surplus of 0.4% to 0.9% of GDP.
“These are encouraging signals, but the challenge remains sustaining these gains beyond 2026,” EY noted. “Budget credibility will depend on government’s ability to balance revenue performance with realistic expenditure planning.”
The firm welcomed the government’s decision to maintain its fiscal consolidation path and increase investment in growth-enhancing sectors. Capital expenditure is projected to rise to GH¢33.7 billion in 2026, representing nearly 5% of GDP. However, EY warned that the government must avoid the historical trend of under-execution in capital spending.
On revenue policies, EY observed that the government aims to push the tax-to-GDP ratio to 17.6% while pursuing reforms to reduce distortions and expand the tax base. The budget introduces electronic invoicing for SMEs, enhanced digital auditing tools, and improved tax compliance systems measures EY believes are necessary but not sufficient on their own.
“It is critical for government to broaden the tax base and strengthen enforcement. Relying on a narrow pool of compliant taxpayers will not deliver the revenue needed to anchor fiscal reforms,” it said.
EY also highlighted the ongoing challenges in the energy sector despite recent renegotiation of power purchase agreements (PPAs). While the government expects savings of over US$250 million and the restructuring of GH¢1.1 billion in energy-sector liabilities, EY argues that the structural problems, particularly technical and commercial losses, still threaten fiscal stability.
“The energy sector continues to accumulate debt, posing liquidity risks to state-owned enterprises. Without accelerated reforms at the distribution level, Ghana risks sliding back into a cycle of unsustainable sector arrears,” the firm warned.
On monetary policy, EY expects stability in interest rates as inflation moderates, but cautions that investor sentiment could shift if uncertainties around fiscal consolidation, revenue targets or political transitions deepen. The firm anticipates a conservative posture by the Bank of Ghana’s Monetary Policy Committee in the coming quarters.
EY also raised concerns about Ghana’s external financing prospects. Although investor confidence is gradually recovering, global interest rate conditions remain tight, and Ghana’s access to international capital markets is still constrained. The firm therefore advises prudent management of foreign reserves and careful sequencing of external borrowing strategies.
“Financing conditions will remain challenging in 2026. Ghana must prioritise concessional borrowing and maintain strong engagement with creditors to sustain the gains made under debt restructuring,” the analysis stated.
Looking ahead, EY maintains that the 2026 Budget lays a generally positive framework but lacks clarity on implementation timelines for several policy interventions. It emphasised the need for strong political will during an election year, transparent budget reporting, and improved coordination among economic management institutions.
“Macroeconomic recovery is underway, but its durability depends on policy consistency and rigorous execution. Ghana has an opportunity to reset its fiscal landscape. The key question is whether these reforms will be sustained long enough to deliver meaningful transformation,” the advisory firm concluded.
