The World Bank has cautioned that Ghana’s fiscal surplus has been achieved largely through spending cuts, with capital expenditure ending 38% below the approved budget.

World Bank Division Director for Ghana, Liberia and Sierra Leone, Robert R. Taliercio, said the approach had helped improve Ghana’s fiscal position but raised concerns about the sustainability of the country’s fiscal consolidation.

He was speaking in Accra at the launch of the World Bank’s Tenth Ghana Economic Update.

“The fiscal surplus was achieved largely through expenditure compression, with capital spending 38% below budget, which is not sustainable.”

Mr Taliercio said Ghana’s fiscal consolidation should not rely heavily on reductions in capital expenditure because such spending is critical to infrastructure development and long-term economic growth.

He said while expenditure restraint could provide short-term fiscal relief, prolonged underinvestment in capital projects could weaken the economy’s productive capacity and affect growth prospects over time.

The World Bank is therefore calling for reforms that will allow Ghana to maintain fiscal discipline while protecting priority investments and essential public services.

The assessment comes as Ghana continues to implement measures aimed at restoring macroeconomic stability, strengthening public finances and reducing debt vulnerabilities.

The World Bank said stronger domestic revenue mobilisation and improved expenditure management would be critical to creating fiscal space for development.

Mr Taliercio’s remarks highlight the challenge facing government: maintaining the recent improvement in Ghana’s fiscal position while ensuring that spending cuts do not come at the expense of investments needed to support productivity, infrastructure, competitiveness and job creation.

The Tenth Ghana Economic Update assesses Ghana’s recent economic performance and outlines policy measures the World Bank believes are necessary to sustain the recovery and promote stronger and more inclusive growth.