2027 Budget must answer 3 key questions on the ‘New Economy’ – US-based economist

An Assistant Professor at Niagara University in New York, Dr Dennis Nsafoah, has raised three important economic policy questions about the government-touted ‘New Economy’, saying the questions deserve careful consideration ahead of the budget presentation.

These important questions are “How much of the announced investment is genuinely new? How will the government finance the larger fiscal deficit? And how will the investment programme be reconciled with the government’s ambitious foreign reserve accumulation strategy?

According to him, the New Economy presents an opportunity for Ghana to translate recent macroeconomic stability into sustained economic growth.

However, Dr. Nsafoah pointed out that its success will depend on whether the government channels the additional fiscal space into genuinely productive investment, finances the resulting deficit without undermining private-sector credit, and reconciles its growth ambitions with Ghana Accelerated National Reserve Accumulation Policy’s (GANRAP’s) aggressive reserve accumulation targets.

On November 12, 2026, Ghana’s Minister for Finance, Dr. Cassiel Ato Forson, is expected to present the 2027 Budget, which the government is promoting as the beginning of a New Economy. At the centre of this agenda is a proposed US$10 billion investment programme over four years, targeting infrastructure, agriculture, manufacturing and other productive sectors.

Dr. Nsafoah alluded that the shift from macroeconomic stabilisation toward investment-led growth is a welcome policy direction. “Having made significant progress in restoring macroeconomic stability, Ghana now has an opportunity to build on these gains by addressing structural constraints to economic growth, expanding productive capacity, creating sustainable employment and improving household incomes”.

Three Economic Policy Questions

On how much of the new economy investment, the government intends to reduce its primary surplus target from 1.5% of Gross Domestic Product (GDP) to 0.5% in 2027, creating additional fiscal space equivalent to approximately 1.0% of GDP. Preliminary announcements also suggest additional revenue mobilisation of 0.5% of GDP, potentially increasing total fiscal space by 1.5 percentage points.

However, Dr. Nsafoah said the 2026 Budget had already projected capital expenditure of 4.6% of GDP for 2027, a level arguably inadequate for an economy facing significant infrastructure deficits and an urgent need for productive investment. “The critical question is therefore how much additional investment the New Economy will deliver beyond this already modest allocation”, he asked.

Regarding how the government will finance the larger deficit, the US-based economist said a reduction in the primary surplus from 1.5% to 0.5% of GDP would, holding other fiscal aggregates constant, would increase the overall cash deficit from approximately 2.5% to 3.5% of GDP.

According to him, this raises an important financing question, particularly because Ghana has substantial debt repayment obligations and the government has indicated that it does not intend to return to the international Eurobond market.

GANRAP Target Must be Heavily Scrutinised

The third question concerns the compatibility of the New Economy with the Ghana Accelerated National Reserve Accumulation Policy (GANRAP), particularly its ambitious target of 15 months of import cover by 2028.

Dr. Nsafoah therefore called for the scrutiny of the magnitude and feasibility of this target.

“The magnitude and feasibility of this target deserve scrutiny. According to the Bank of Ghana, gross international reserves declined from US$13.83 billion (5.7 months of import cover) in December 2025 to US$11.07 billion (4.2 months) in August 2026. At August’s implied monthly import-cover denominator, reaching 15 months would require reserves of roughly US$39.5 billion—about US$28.5 billion above the August stock within approximately two years. Meanwhile, scheduled external debt amortisation is projected to increase from GH¢24.8 billion in 2026 to GH¢35.5 billion in 2027, representing substantial foreign-exchange obligations that must be accommodated alongside the reserve accumulation strategy”.

According to him, these obligations coincide with the government’s intention to accelerate productive investment under the New Economy, which will likely increase imports of machinery, equipment and intermediate inputs before generating additional export earnings. Consequently, the government faces the challenge of simultaneously financing investment-related imports, meeting rising external debt obligations and accumulating international reserves at an unprecedented pace.

He adds, the potential fiscal trade-off is equally important. “In the 2026 Mid-Year Budget Review, the government allocated GH¢5 billion to GoldBod while reducing planned capital expenditure by an equivalent amount. Although acquiring reserve assets differs from ordinary expenditure, these adjustments raise questions about the opportunity costs of prioritising reserve accumulation over growth-enhancing investment”.

“While stronger international reserves and productive investment can reinforce each other over time, the scale and timing of GANRAP’s targets raise legitimate questions about their compatibility with the New Economy. The 2027 Budget must therefore provide a convincing explanation of how the government intends to reconcile these competing demands without allowing the pursuit of an exceptionally ambitious reserve target to constrain productive investment and economic growth”, he mentioned.

He concluded his article, saying the 2027 Budget must demonstrate that these policy objectives are mutually consistent and, ultimately, capable of delivering higher productivity, employment and household incomes.

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