Weak Revenue, Rising Wage Bill Pose Fiscal Risks – BoG
By Praisebell Rosemond Larbi
The Bank of Ghana has raised fresh concerns over Ghana’s fiscal outlook, warning that weak revenue performance and rising compensation costs in 2025 could undermine macroeconomic stability if not addressed.
In its January 2026 Monetary Policy Report, the central bank noted that although ongoing fiscal consolidation efforts are helping to slow debt accumulation, emerging pressures, particularly from the public sector wage bill, pose significant risks to the sustainability of public finances.
According to the report, total revenue and grants for 2025 fell short of expectations, reaching GH¢187.87 billion, equivalent to 13.4 per cent of Gross Domestic Product (GDP), against a target of GH¢201.37 billion, or 14.4 per cent of GDP.
Domestic revenue performance was similarly weak. Government mobilised GH¢186.57 billion (13.3% of GDP), below the projected GH¢199.05 billion (14.2% of GDP). The shortfall was largely attributed to underperformance in tax revenue, as well as lower-than-expected inflows from the oil and gas sector and grants.
The central bank cautioned that these revenue gaps, coupled with persistent expenditure pressures, especially compensation of employees could widen fiscal imbalances and complicate efforts to maintain macroeconomic stability.
“Weak revenue outturns and compensation pressures present risks to the fiscal outlook,” the report indicated.
Despite these concerns, the Bank of Ghana acknowledged that government’s ongoing fiscal consolidation measures are yielding some positive results, particularly in moderating the pace of debt accumulation and reducing debt servicing costs.
The report stressed that sustaining these gains will depend on a combination of stronger economic growth, lower real interest rates, and continued exchange rate stability.
“Sustained improvements in real growth, lower real interest rates and exchange rate stability remain key to achieving medium-term debt sustainability,” the central bank stated.
On the external front, the Bank warned that the completion of Ghana’s remaining external debt restructuring negotiations could present short-term challenges, particularly in meeting external payment obligations. This, it said, could exert pressure on the local currency if not carefully managed.
To mitigate such risks, the central bank underscored the need for increased domestic savings to support external debt servicing requirements going forward.
It also highlighted the importance of building strong foreign exchange reserves to cushion the economy against potential shocks.
“Significantly large reserve accumulation remains key to meeting high external debt service payments and containing exchange rate pressures,” the report noted.
The Bank of Ghana’s assessment reinforces the need for continued fiscal discipline, improved revenue mobilisation, and prudent expenditure management to safeguard recent macroeconomic gains and ensure long-term economic stability.
