Accra, 3rd March 2025 – In his presentation at the National Economic Dialogue, Hon. Dr. Cassiel Ato Forson, Minister for Finance, painted a stark picture of Ghana’s current fiscal constraints, outlining how high interest payments, substantial energy subsidies, and rising rigidities in government spending are limiting the nation’s economic flexibility.
Dr. Forson revealed that government expenditure has grown faster than GDP over the past decade, exacerbating the fiscal space crisis. He highlighted three major categories of non-discretionary spending—public sector wages, interest payments, and earmarked funds—which now account for a staggering 70% of total government expenditure. As a result, vital investments in capital expenditure, including infrastructure, have been severely constrained.
The Minister pointed out that inefficient public spending continues to undermine social programs, particularly in the health and education sectors. The National Health Insurance Scheme (NHIS), for instance, is facing significant financing shortfalls, partly due to the capping law that limits its allocation from the National Health Insurance Levy (NHIL). Additionally, more than 40% of NHIS resources are being diverted to non-core activities, leaving less than 60% of the budget for claim payments, undermining the effectiveness of the program.
In education, Dr. Forson noted that public spending is skewed towards secondary and tertiary levels, with only about a quarter of the government’s education budget directed to pre-primary and primary education. He pointed out that the majority of education funds are allocated to staff compensation, leaving little for essential classroom materials or infrastructure improvements.
The Minister also criticized the inefficiency in infrastructure spending, emphasizing that many projects, including the Agenda 111 hospitals initiative, have seen significant financial commitments with minimal results. Despite spending over US$400 million in the last four years, none of the planned hospitals are yet operational. Dr. Forson highlighted that the funds spent so far could have been used to complete 22 functional hospitals, calling for a more focused approach to infrastructure development.
Furthermore, Dr. Forson stressed the need for better road maintenance, noting that only 41% of primary roads were in good condition as of 2021, with road maintenance funds covering just 45% of required maintenance needs.
In closing, the Minister underscored the urgency of implementing fiscal reforms to address these inefficiencies, stating that without these reforms, the country risks missing out on key opportunities for long-term development. He called for a strategic reallocation of resources to ensure that government spending supports critical sectors and delivers tangible results for the Ghanaian people.
Source:Mybrytfmonline.com/Gumedzo Isaac Acheampong
