Finance Minister Dr. Cassiel Ato Forson has cautioned that excessive and inefficient public spending is pushing Ghana toward economic instability.
Speaking at the National Economic Dialogue in Accra, he stressed the urgent need for expenditure reforms, calling for tighter fiscal discipline and better resource allocation.
Dr. Forson revealed that Ghana’s government expenditure has outpaced GDP growth over the past decade, leading to an unsustainable fiscal situation.
He pointed out that a significant portion of spending is consumed by wages and salaries, high energy subsidies, and ballooning interest payments, leaving little room for investment in infrastructure and social services.
“These rigid expenditures make it almost impossible to direct resources toward economic transformation. We are spending more but getting less in return,” he lamented.
Health Sector Underfunding and Misuse
Dr. Forson highlighted financial inefficiencies in the National Health Insurance Scheme (NHIS), revealing that only 58% of NHIS funds go toward actual claims payments, with the rest diverted to non-core activities.
“The NHIS is meant to ensure healthcare for all, but inefficiencies and financial leakages are crippling it,” he stated.
Education Spending Failing to Deliver Results
He criticized the allocation of education funds, noting that while spending is skewed toward secondary and tertiary levels, basic education remains underfunded.
“Our children are our future, yet the majority of education funds go to wages rather than improving learning conditions,” he pointed out.
Infrastructure Projects Left Unfinished
Dr. Forson cited wasteful spending on incomplete infrastructure projects, particularly Agenda 111, where $400 million was spent over four years without a single operational hospital. Completing these projects would require an additional $1.5 billion.
“We cannot continue spreading resources across too many projects without completing any. This approach is wasteful and unsustainable,” he said.
Energy Sector a Major Financial Burden
The minister described Ghana’s energy sector as a significant financial drain, costing the country 2% of GDP annually. Despite $2.1 billion in government transfers over the past two years, the sector remains in crisis, with projected financial shortfalls exceeding $9 billion by 2026.
Key challenges include high generation costs, massive revenue losses at the Electricity Company of Ghana (ECG), and tariffs that do not reflect real costs.
“The energy sector is bleeding our economy. Without radical reforms, it will become unsustainable,” Dr. Forson warned.
Urgent Reforms Needed
To address these inefficiencies, Dr. Forson outlined several reforms, including reallocating funds to priority areas such as healthcare, education, and infrastructure, enhancing efficiency in public spending, and reforming state-owned enterprises (SOEs) like COCOBOD and ECG to reduce financial losses.
He also called for eliminating wasteful subsidies while protecting the vulnerable and implementing strict procurement and financial management controls to curb corruption and mismanagement.
“We cannot afford to continue spending recklessly. Every Ghanaian is feeling the impact of poor financial decisions. Now is the time for discipline, accountability, and smarter spending,” he concluded.
The National Economic Dialogue continues with discussions on implementing these critical reforms.
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