Keypoints:
- Growth and debt indicators strengthen recovery
- Underspending raises serious delivery questions
- COCOBOD payments ease pressure on farmers
GHANA’S economic recovery has moved beyond cautious optimism. Growth is strong, inflation remains low by recent standards, debt ratios have fallen and external buffers have improved, but the 2026 Mid-Year Fiscal Policy Review shows that the hardest phase of the turnaround is only beginning.
The review matters because Ghana’s immediate economic emergency has largely receded. President John Mahama’s government must now prove that restored stability can produce reliable public investment, employment and higher household incomes without recreating the hidden liabilities and uncontrolled commitments that contributed to the country’s debt crisis.
Recovery is no longer theoretical
Ghana’s economy expanded by 6.4 percent year on year during the first quarter of 2026, putting growth ahead of the pace implied by the government’s 4.8 percent full-year projection. Non-oil GDP grew by 6.3 percent, while annual economic growth had already reached six percent in 2025.
The improvement extends Africa Briefing’s earlier analysis of Ghana’s economic recovery, which identified employment, household income and economic diversification as the decisive tests once macroeconomic stability returned.
Inflation stood at 5.3 percent in June, up from 3.7 percent in May and 3.2 percent in March. The rate remained below the lower boundary of the Bank of Ghana’s six-to-10-percent target band, although its recent increase shows that the disinflationary process cannot be taken for granted.
Lower inflation does not mean prices have returned to their pre-crisis levels. It means they are rising more slowly after years in which food, transport, rent, utilities and other essential costs severely weakened household purchasing power.
The public will therefore judge the recovery less by the inflation rate itself than by whether wages, employment and access to affordable credit begin to improve.
Debt decline restores credibility
The government reported that Ghana’s public debt ratio fell from 61.8 percent of GDP at the end of 2024 to 44.7 percent at the end of 2025 before edging up to 45 percent by June 2026.
That placed debt at the statutory ceiling years before the 2034 deadline.
Forson said Ghana’s external and overall risk of debt distress had improved from high to moderate. He added that the joint IMF-World Bank assessment now classified the country’s debt as sustainable with room to absorb shocks.
The IMF has independently acknowledged Ghana’s marked debt-sustainability gains, although the government must continue managing refinancing pressures, remaining creditor negotiations and future repayment obligations carefully.
The decline in the debt ratio reflects debt restructuring, stronger growth, fiscal consolidation and currency movements. A stronger cedi reduces the domestic value of foreign-currency debt, meaning some of the improvement could be reversed if exchange-rate conditions deteriorate.
Ghana must also complete negotiations with remaining non-bonded commercial creditors and prepare for heavier external repayments in 2027 and 2028.
The government’s early $700m Eurobond payment has strengthened its emerging repayment record. But financial markets will require consistent debt servicing, transparent borrowing and credible reserve management over several years.
Forson framed the progress in emphatic terms, telling Parliament: ‘Ghana has moved from default to credibility, from debt distress to debt sustainability, from market exclusion to renewed investor confidence.’
That is a powerful political message. Yet credibility after default remains fragile and must be reinforced through repeated performance rather than declarations.
Fiscal discipline exposes delivery gap
The strongest caution in the review lies within the expenditure figures.
According to the official 2026 Mid-Year Fiscal Policy Review, total revenue and grants reached GH¢124.8bn ($10.8bn) during the first half of 2026, marginally below the programmed target of GH¢126.1bn ($10.9bn).
Total expenditure on a cash basis amounted to GH¢136.9bn ($11.8bn), substantially below the GH¢172.5bn ($14.9bn) programmed for the period. The shortfall helped contain the fiscal deficit, but it also raises questions about whether ministries and agencies are implementing approved programmes quickly enough.
Capital expenditure totalled GH¢22.2bn ($1.9bn). Domestically financed capital spending accounted for GH¢19.8bn ($1.7bn), while foreign-financed investment reached only GH¢2.4bn ($207m).
The government also reported clearing GH¢5.3bn ($457m) in legacy arrears without accumulating new payables during the first half.
Forson told Parliament that the government would not request a supplementary appropriation and would instead realign expenditure within the existing budget. That supports the administration’s claim that it is resisting pressure to spend beyond approved limits.
However, expenditure being below target is not automatically evidence of efficient management.
The favourable interpretation is that commitment controls are working and preventing ministries from entering contracts without confirmed funding. That would mark a major break from the arrears, unpaid certificates and unbudgeted obligations that helped drive Ghana into distress.
The less favourable interpretation is that procurement bottlenecks, administrative delays and weak foreign disbursements are preventing the government from delivering projects already approved by Parliament.
A deficit that improves because waste has been eliminated is a genuine fiscal achievement. A deficit that improves because roads, hospitals, schools, irrigation systems and social programmes have stalled presents a very different result.
Independent analysis of first-quarter data had already suggested that government expenditure was running substantially below programme, with capital investment and foreign-financed projects recording some of the largest shortfalls.
The mid-year figures indicate that the execution problem remained unresolved during the second quarter.
Reserve strategy creates hard choices
The government has allocated GH¢5bn ($431m) to the Ghana Accelerated National Reserve Accumulation Programme, which is intended to build external buffers and reduce Ghana’s historical dependence on borrowing to support its reserves.
At the same time, projected foreign-financed capital expenditure has been revised downwards by GH¢3bn ($259m) because bilateral development partners have disbursed project funds more slowly than expected.
Building reserves can protect the cedi, strengthen investor confidence and provide insurance against external shocks. But the decision also carries an opportunity cost because resources placed into financial buffers cannot simultaneously finance infrastructure or productive investment.
Ghana reported a current-account surplus of $5.1bn during the first half of 2026 and a trade surplus of $8.8bn, equivalent to 6.6 percent of GDP. Gold exports were an important contributor to that performance.
The country must use today’s commodity earnings to strengthen its productive base rather than assume elevated gold prices will persist indefinitely.
A reserve strategy built heavily around one commodity leaves Ghana exposed to changes in international prices, mining production and global demand. Diversification into manufacturing, agro-processing, technology and higher-value services remains essential.
IMF transition moves towards implementation
Ghana had already negotiated the foundations of its next relationship with the IMF nearly 10 weeks before the mid-year review.
On May 15, Ghanaian authorities and IMF staff reached staff-level agreement on the sixth and final review of the country’s $3bn Extended Credit Facility and on a request for a 36-month, non-financing Policy Coordination Instrument.
The agreement remained subject to IMF management approval and Executive Board consideration. The IMF described its conclusions as preliminary and said a staff report would be submitted to the board for discussion and a decision.
The Policy Coordination Instrument would provide no additional IMF loan. It would instead maintain structured monitoring of fiscal policy, debt management, public financial reforms, monetary policy, governance and economic diversification.
The issue is therefore no longer whether Ghana can negotiate a post-ECF framework. The staff-level negotiations were concluded in May. The real test is whether the government can implement the reforms already agreed.
In a May 28 parliamentary statement, Forson described the changing relationship by saying: ‘We have evolved from a position of “supplicant” to one of “partner”.’
The distinction is politically important, but partnership does not mean the disappearance of IMF scrutiny. The Policy Coordination Instrument would still involve targets, reviews and external assessment, although without further programme financing.
As Africa Briefing’s earlier assessment of Ghana’s IMF transition argued, the credibility of the next phase will depend on whether domestic institutions can enforce the discipline previously imposed by emergency external financing.
Cocoa payments ease farmer pressure
COCOBOD’s financial position remains an important fiscal concern, but the government has acted to address the immediate payment difficulties facing cocoa farmers and Licensed Buying Companies.
On July 2, COCOBOD released GH¢2.6bn ($224m) to Licensed Buying Companies for onward payment to farmers across Ghana’s cocoa-growing regions.
Approximately GH¢1.4bn ($121m) of the release was earmarked to clear remaining balances owed to farmers whose cocoa had been purchased on credit.
COCOBOD said its total disbursements to Licensed Buying Companies since the beginning of the 2025/26 crop season had reached GH¢34.52bn ($2.98bn). It also introduced monitoring measures intended to ensure that the funds reached the farmers who were owed.
The release provides meaningful relief to farmers and reduces immediate pressure on Licensed Buying Companies. It also corrects the impression that the government has left outstanding farmer payments unresolved.
However, paying farmers does not, by itself, resolve the broader financial weaknesses within the cocoa sector.
COCOBOD still requires a sustainable funding model, tighter operating costs, stronger governance and protection against volatile international cocoa prices. The institution must be able to pay farmers promptly without repeatedly depending on emergency government intervention or accumulating obligations that later migrate onto the national balance sheet.
The immediate payment problem and the institution’s structural financial challenge are related, but they are not the same issue.
Hidden liabilities remain dangerous
The IMF has recognised Ghana’s rapid disinflation, stronger reserves, improved confidence in the cedi and progress on debt restructuring.
It has also warned that state-owned enterprises, contingent liabilities and continuing quasi-fiscal activities remain significant risks. Structural reforms were implemented with delays during the ECF programme, increasing the importance of sustained implementation under the proposed Policy Coordination Instrument.
Energy-sector losses can eventually require Treasury support. State enterprises can accumulate debts that later become public liabilities. Financial risks linked to gold-purchasing and reserve-accumulation operations can also affect the Bank of Ghana’s balance sheet.
In the cocoa sector, the July payment intervention has addressed an urgent obligation to farmers. The next test is whether COCOBOD’s reforms can prevent similar payment pressures from returning.
Ghana could otherwise replace an obvious sovereign debt crisis with a quieter build-up of contingent liabilities across the wider public sector.
Fiscal credibility therefore requires transparent reporting not only by the Finance Ministry, but also by COCOBOD, energy-sector institutions, statutory funds, state enterprises and the central bank.
Forson recognised the danger during the opening of the final IMF review, saying: ‘Progress does not permit complacency.’
He added: ‘We must ensure that stability translates into more investment, more jobs, and more opportunities for all.’
Stability must unlock production
That statement captures the central economic challenge facing the Mahama government.
Lower inflation, falling interest rates and relative currency stability should gradually improve conditions for businesses. Yet many companies still face high commercial lending rates, unreliable infrastructure, expensive utilities and limited access to long-term capital.
The government’s 24-Hour Economy and Accelerated Export Development Programme seeks to expand production, manufacturing, agriculture, logistics and exports through coordinated investment and longer operating hours.
Mahama has placed agro-processing at the centre of that strategy. As Africa Briefing reported on Ghana’s agro-industrial plans, the government wants to process more cocoa, cashew, shea, rubber and other commodities locally rather than exporting raw materials and importing finished products.
The ambition is economically sound, but it depends on execution.
Factories cannot run additional shifts without reliable electricity. Exporters cannot compete if ports and customs systems are slow or expensive. Farmers cannot supply processors consistently without irrigation, storage, rural roads and affordable inputs.
A recovery based largely on fiscal compression, debt restructuring and strong commodity earnings will remain vulnerable. One supported by manufacturing, modern agriculture, technology and value-added exports would be far more durable.
Jobs will define public verdict
Official data placed Ghana’s unemployment rate at 13 percent in the third quarter of 2025. Multidimensional poverty affected 21.9 percent of the population, while food insecurity affected 38.1 percent.
These figures explain why stronger GDP growth and lower inflation have not automatically produced a comparable improvement in household welfare.
Most citizens will not measure the recovery through primary balances, debt ratios or months of import cover. They will measure it through employment, wages, food costs, affordable credit and the quality of public services.
The government must therefore accelerate investment without abandoning the fiscal controls that restored stability.
That is a difficult balance. Moving too slowly risks producing a recovery that looks impressive in official statistics but feels distant to households. Spending too quickly or without adequate controls could recreate the arrears and debt vulnerabilities Ghana has only recently begun to overcome.
What happens next?
The remainder of 2026 will test whether the government can close its budget-execution gap while preserving fiscal discipline.
Revenue mobilisation, capital-project implementation, energy-sector obligations, COCOBOD reforms and the performance of state-owned enterprises will require sustained scrutiny.
The proposed IMF Policy Coordination Instrument must also move beyond negotiated commitments and produce measurable institutional change. Stronger commitment controls, transparent debt reporting and credible oversight of public institutions will determine whether Ghana can avoid its historical cycle of reform, relaxation and renewed distress.
Ghana’s recovery is real. Growth remains strong, inflation is low by recent standards, the debt ratio has declined and investor confidence is gradually returning.
But recovery is a foundation, not an end point.
The defining test for Mahama and Forson is whether Ghana can convert restored stability into productive investment, jobs and higher living standards without reopening the fiscal weaknesses that caused the crisis.
