Expenditure cuts stifling economic growth and stability —Bokpin

Economics Professor Godfred Alufar Bokpin has warned that Ghana's reliance on expenditure cuts to restore macroeconomic stability is postponing the tangible benefits of recovery for ordinary citizens, arguing that austerity has suppressed demand without addressing the infrastructure constraints holding back growth.

Speaking on Joy News' PM Express on Tuesday, Bokpin said the government had made genuine progress on stabilisation indicators, but the method used to achieve it carried a cost that households and businesses are only beginning to feel.

"If you choose that approach, you will get the result, but the impact will not be felt by Ghanaians," he said .

Austerity Without Expansion

Bokpin explained that both the 2025 and 2026 budgets relied heavily on fiscal consolidation, with expenditure restraint central to the effort. That approach lowered inflation by shrinking aggregate demand—but it did nothing to expand the economy's capacity to produce.

"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 .

For a country with a substantial infrastructure deficit, he argued, that distinction matters enormously.

"So, 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" .

The Gap Between Statistics and Daily Life

Bokpin illustrated the disconnect with a reference that has resonated across Ghana's public discourse: the condition of the Accra-Kumasi road, where travellers routinely endure journeys of nine to twelve hours.

"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 5.2% figure reflected September's inflation rate. By October, it had risen to 5.5%, the third consecutive monthly increase, driven by transport inflation surging to 14.1% and services inflation climbing to 11.5% . The very costs that dominate commuters' lives are the ones pushing prices upward.

Bokpin said the policy approach explained why improvements would take time to reach 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" .

Credit Where It Is Due

Despite his criticisms, Bokpin credited the government with largely delivering on its stated two-year stabilisation objective. He pointed to falling inflation and interest rates, alongside a cedi that has held its own against major trading currencies despite renewed pressure.

"I would say they've done quite well in restoring macroeconomic stability," he said .

The data supports that assessment. Ghana completed its US11.9 billion, and the primary fiscal balance restored to a surplus . The cedi recorded a 0.60% gain against the dollar in October, moving from GH¢11.71 to GH¢11.64 .

Bokpin noted that the government had set aside 2025 and 2026 for stabilisation, consistent with the IMF-supported programme. That progress, he said, explained the proposed shift toward transformation through the New Economy agenda.

The Financing Question Ahead

Bokpin's comments come two days before Finance Minister Dr Cassiel Ato Forson presents the 2027 Budget on Thursday, November 12, under the theme "New Economy." The government plans to invest more than US$9 billion in job-creating sectors between 2027 and 2030 .

The Minority in Parliament has questioned how the programme will be financed. Dr Mohammed Amin Adam, Ranking Member on the Finance Committee, 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 .

Bokpin's assessment leaves the government with a narrow path: it must increase investment to address the constraints austerity left untouched, without reigniting the instability it spent two years suppressing. Whether Thursday's budget charts that course is the question that will define Ghana's next economic phase.

Key Points:

· Bokpin's verdict: Government has "done quite well" on stabilisation, but spending cuts have delayed visible benefits

· Core critique: Austerity reduced demand without expanding productive capacity or addressing infrastructure gaps

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

· Acknowledged gains: Falling inflation, lower interest rates, relative cedi stability, IMF programme completed

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