Former Finance Minister, Dr Mohammed Amin Adam, has called for the introduction of a legal framework that would prevent Ghana from borrowing to fund recurrent expenditures, insisting that the practice undermines long-term economic growth.
Speaking during parliamentary debates on the 2026 Budget, Dr Amin Adam recommended adopting a “golden rule” similar to that in the United Kingdom, which explicitly prohibits borrowing for consumption purposes. He argued that while Ghana’s existing financial management framework restricts the reallocation of capital funds to recurrent expenditure, it does not address the core issue of financing consumption through debt.
“This must stop; we should not borrow for consumption anymore,” he stressed, highlighting the need to link revenue allocations directly to productive capital investment.
The former minister also voiced concerns about the country’s capital investment trends, noting that insufficient funding for infrastructure and productive projects continues to limit economic transformation. He observed that the 2026 budget allocates 3.6% of GDP for capital expenditure—an improvement over 2025’s 1.5%—but still below the 4.6% achieved in 2024.
Dr Amin Adam argued that prioritising capital spending over recurrent consumption is key to driving growth and job creation, warning that recurrent borrowing diverts resources away from investments that generate long-term returns.
He further expressed skepticism about Ghana’s revenue projections for 2026, pointing out that by September 2025, revenue and grants amounted to GH¢154.9 billion, or 11.1% of GDP, falling short of the full-year target of GH¢226.5 billion (16% of GDP). The shortfall implies that the fourth quarter would need to deliver nearly one-third of annual revenue—an unusually high and historically challenging target.
“To hit that number, Q4 alone must generate GH¢71.6 billion—40% bigger than the average quarter so far. We must ask what policy, compliance breakthrough, or structural reform supports such an extraordinary target,” he noted.
Dr Amin Adam’s remarks underscore the urgency for strong fiscal discipline, strategic capital allocation, and realistic revenue planning to ensure that borrowing contributes to productive growth rather than short-term consumption.
