Bokpin: Government can’t celebrate austerity

Economics Professor Godfred Alufar Bokpin has delivered a pointed critique of the government's fiscal strategy, arguing that Ghana cannot celebrate spending cuts while a vast infrastructure deficit continues to constrain growth and burden citizens with daily hardship.

Speaking on Joy News' PM Express on Tuesday, Bokpin acknowledged the government's progress in stabilising the economy but warned that its heavy reliance on expenditure cuts would delay the benefits for ordinary Ghanaians.

"For a country that is saddled with a huge infrastructure deficit, imposing restrictions on the growth drivers of the economy, such a country cannot celebrate extensive austerity expenditure cuts," he said .

His comments come two days before Finance Minister Dr Cassiel Ato Forson presents the 2027 Budget on Thursday, November 12, under the theme "New Economy"—a four-year programme intended to shift Ghana from stabilisation to transformation through investment in productive sectors .

Austerity's Limits

Bokpin explained that the government's approach—relying heavily on spending restraint in both the 2025 and 2026 budgets—had succeeded in cooling the economy by shrinking aggregate demand.

"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 .

That distinction matters. Reducing demand can lower inflation, but it does nothing to expand the country's capacity to produce—the very constraint that has kept prices high and growth fragile. The consequences, Bokpin argued, are visible in the gap between improving statistics and the lived experience of citizens.

"If somebody is spending nine to 12 hours to travel from here to Kumasi, inflation of 5.2% means nothing to that person," he said .

The reference to 5.2% reflects September's inflation rate. By October, inflation had risen to 5.5%, the third consecutive monthly increase, driven largely by transport costs, which surged to 14.1% from 5.7%, and services inflation, which climbed to 11.5% from 8.3% . Services are now rising roughly three times as fast as goods.

Credit for Stabilisation

Despite his criticisms, Bokpin credited the government with largely delivering on its initial stabilisation objective. He pointed to falling inflation and interest rates, alongside the cedi's relative resilience despite renewed pressure.

"To that extent, and to the extent that that is what we are set out to achieve in the first two years of the administration, I would say they've done quite well in restoring macroeconomic stability," he said .

The government had designated 2025 and 2026 as years for restoring stability, with spending cuts featuring prominently in both budgets. That approach aligned with the IMF-supported programme, which concluded in July 2026 with a final disbursement of US3 billion .

The Financing Question Ahead of the Budget

Bokpin's intervention comes as the government prepares to unveil its New Economy programme, which President Mahama has said will invest more than US$9 billion in job-creating sectors between 2027 and 2030 .

The Minority in Parliament, led by Dr Mohammed Amin Adam, has questioned how the programme will be financed. Amin Adam has demanded accountability for existing flagship initiatives—particularly the 24-Hour Economy—before new commitments are made, noting that only GH¢110 million was allocated to that programme in the 2026 Budget against a projected US$4 billion investment target .

Finance Minister Forson has ruled out additional borrowing, saying the New Economy will be funded through 1.5% of GDP annually from domestic revenue and savings from fiscal consolidation, including reducing the primary surplus target from 1.5% to 0.5% of GDP .

Bokpin's argument points to a deeper tension: the government must increase investment to address the infrastructure constraints holding back growth, but it must do so without reigniting the instability it spent two years suppressing. Whether Thursday's budget resolves that tension is the question that will define the next phase of Ghana's economic management.

Key Points:

· Bokpin's verdict: Stabilisation achieved, but spending cuts have delayed tangible benefits for citizens

· Infrastructure gap: Austerity has restricted investment in growth drivers while leaving production capacity constrained

· Inflation reality: October inflation rose to 5.5%, with transport at 14.1% and services at 11.5%

· Acknowledged progress: Falling inflation, interest rates, and relative cedi stability

· Budget ahead: 2027 "New Economy" programme to be presented November 12 amid financing questions.