IMF backs higher development spending from 2027
The International Monetary Fund (IMF) has signalled support for a more flexible fiscal strategy for Ghana from 2027, paving the way for increased development spending while keeping the country on track to achieve its long-term debt reduction objectives.
In its latest Article IV Consultation and proposed Policy Coordination Instrument (PCI) report, the Fund said Ghana’s recent gains in restoring macroeconomic stability and improving debt sustainability provide sufficient justification for recalibrating its medium-term fiscal framework.
Under the proposed approach, the IMF said Ghana could reduce its primary fiscal surplus target from 1.5 per cent of Gross Domestic Product (GDP) to 0.5 per cent from 2027 onwards without compromising its statutory objective of lowering public debt to 45 per cent of GDP by 2034.
According to the Fund, the revised fiscal path would allow government to channel additional resources into critical development priorities while maintaining prudent debt management.
“The lowering of the fiscal primary surplus will be supported by an ambitious package of fiscal structural reforms to contain quasi-fiscal pressures and safeguard debt sustainability,” the report said, adding that improvements in tax administration, public financial management and oversight of state-owned enterprises would help maintain fiscal discipline.
The IMF noted that the 2026 Budget remains aligned with the current programme framework, targeting a primary surplus of 1.5 per cent of GDP. However, it believes reducing the target to 0.5 per cent from 2027 would create additional fiscal space for development expenditure while preserving adequate policy buffers under the proposed PCI arrangement.
The Fund attributed this flexibility to the significant progress Ghana has made in restoring debt sustainability, alongside continued implementation of reforms aimed at strengthening public financial management and improving fiscal governance.
It further stated that the revised fiscal strategy would support higher investment in priority sectors without undermining the country’s broader fiscal consolidation agenda, thereby promoting a more balanced approach to economic growth and debt reduction.
The IMF also drew attention to Ghana’s substantial financing requirements for achieving the Sustainable Development Goals (SDGs), estimating that public expenditure equivalent to more than 16 per cent of GDP will be required by 2030 to meet targets in areas such as education, healthcare and infrastructure.
It noted that increased investment in labour-intensive sectors, including agriculture and energy, could stimulate private sector participation, expand domestic value addition and generate employment opportunities, particularly for the country’s growing youth population.
Under the proposed Policy Coordination Instrument, government is expected to increase primary expenditure from 2027 with greater emphasis on capital investment. The programme also envisages stronger domestic revenue mobilisation through tax reforms, enhanced compliance and improvements to tax administration.
Among the measures outlined are reviews of customs, excise and income tax legislation, alongside reforms to be implemented under a new Medium-Term Revenue Strategy aimed at strengthening Ghana’s revenue base.
The report said the Ghanaian authorities agreed that the proposed fiscal adjustment reflects the country’s improved debt outlook and acknowledged that the additional fiscal space would be directed towards priority development programmes and employment generation.
“The authorities viewed the more relaxed fiscal stance as justified by strong policy action and sustained improvement in debt dynamics,” the IMF said.
“They emphasised that freed fiscal space is needed for priority spending to support jobs and development, reaffirmed commitment to fiscal structural reforms, and agreed to prioritise revenue mobilisation.”
