Economics professor Godfred Alufar Bokpin has cautioned that the government’s heavy reliance on expenditure cuts to restore macroeconomic stability is dampening economic activity and weakening consumer demand, despite improvements in key economic indicators.
Speaking on Joy News’ PM Express on Tuesday, Prof Bokpin acknowledged that the fiscal consolidation measures were helping to stabilise the economy but warned that their benefits would take time to translate into improved living conditions for ordinary Ghanaians.
He explained that extensive spending cuts could reduce aggregate demand and help bring inflation under control, but would not necessarily address the structural supply constraints limiting economic growth.
“So if you rely extensively on expenditure cuts, you restore macroeconomic stability. You cool the economy.”
“You are shrinking aggregate demand as a way of also bringing inflation down, rather than expanding the economy’s severe or restricted supply capacity,” he said.
His comments come ahead of the presentation of the 2027 Budget Statement to Parliament on Thursday, November 12. The government is expected to use its New Economy agenda to transition from economic stabilisation towards increased investment, job creation and higher incomes.
The Minority has, however, raised concerns about how the proposed programme will be financed and called for accountability on existing flagship initiatives. It has also questioned the disconnect between declining inflation and the continued cost-of-living pressures experienced by households.
Prof Bokpin observed that the 2026 Budget remained heavily reliant on expenditure restraint, continuing the fiscal approach adopted in 2025.
He argued that Ghana’s significant infrastructure deficit made extensive spending cuts particularly concerning, stressing that public investment was necessary to address the structural challenges constraining economic growth.
“If you choose that approach, you will get the result, but the impact will not be felt by Ghanaians,” he said.
To illustrate the disconnect between improving economic indicators and everyday experiences, he pointed to the challenges faced by commuters travelling on Ghana’s road network.
“If somebody is spending nine to 12 hours to travel from here to Kumasi, inflation of 5.2% means nothing to that person,” he remarked.
According to the economist, the situation explains why improvements in headline economic figures may not immediately translate into tangible relief for households.
“It’s simply because the approach we have adopted in restoring macroeconomic stability is going to take a while to reflect in the lives of Ghanaians,” he added.
Despite his concerns, Prof Bokpin acknowledged the government’s progress in restoring macroeconomic stability. He cited declining inflation and interest rates, the accumulation of international reserves and the relative resilience of the cedi, notwithstanding renewed pressure on the currency.
He noted that economic stabilisation had been identified as the administration’s primary objective during its first two years in office, an approach that also aligned with the stabilisation objectives of Ghana’s International Monetary Fund (IMF) programme.
“I would say they’ve done quite well in restoring macroeconomic stability,” he said.
His assessment highlights the policy challenge confronting government as it prepares the 2027 Budget: sustaining the gains made in macroeconomic stabilisation while increasing public investment and ensuring that economic improvements translate into better living conditions for Ghanaians.
