2027 budget: Reckless spending, weak revenue and expensive debt caused 2022 crisis – Ato Forson

Finance Minister Dr Cassiel Ato Forson has attributed Ghana's 2022 economic crisis to excessive government expenditure, poor revenue mobilisation and the high cost of borrowing, which he said combined to push the country's public finances into an unsustainable position.

Addressing Parliament during the presentation of the 2027 Budget, he explained that successive spending commitments had been supported by temporary economic gains, creating a situation that eventually became difficult for the country to maintain.

He said the crisis exposed major weaknesses in public financial management and left Ghana struggling to meet its debt obligations.

“Temporary booms had financed permanent commitments. Reckless spending, weak revenue and expensive debt produced deficits that could no longer be sustained,” he said.

Dr Forson recalled that inflation had climbed to 54.1 per cent by the end of 2022, while the primary balance recorded a deficit of 4.3 per cent of Gross Domestic Product (GDP).

He further disclosed that the International Monetary Fund's debt sustainability analysis had placed Ghana's debt above 100 per cent of GDP, while the country's gross international reserves had dropped to less than three weeks of import cover.

The Finance Minister, however, said the economic indicators alone could not adequately capture the difficulties households and businesses endured during the period.

He noted that families faced soaring food prices, transport fares and medicine costs, while businesses struggled with high interest rates and the rapid depreciation of the cedi.

“Families were forced to make impossible choices, postpone education, housing and healthcare,” he said.

He also pointed to the impact of the debt restructuring exercise, which resulted in financial losses for households, pension funds, banks, businesses and investors.

Dr Forson said restoring economic stability was not enough, insisting that the government had a responsibility to ensure that the sacrifices made by Ghanaians would not burden future generations.

“We owe them a country that honours their sacrifices and ensures that the hardships they have endured does not become their children’s inheritance,” he told Parliament.