BY Daniel Bampoe
Ghana’s economic recovery agenda under President John Dramani Mahama is facing mounting pressure, following disclosures that the government was forced to borrow about GH₵17 billion in 2025 to meet public sector salary obligations.
The development has intensified concerns about the country’s fiscal health and raised questions about the sustainability of the administration’s much-publicised “Resetting Ghana” programme.This will have telling effect on the 24-hour economy as the government phantom 1:3:3 employment formula of one job for three people under three shifts has been thrown out.
Details emerging from the Ministry of Finance indicate that the borrowing became unavoidable after government revenue fell significantly short of expenditure demands. Out of a total tax revenue of GH₵183 billion recorded in 2025, statutory payments—including debt servicing and transfers to funds such as GETFund, DACF and NHIL—consumed GH₵122.1 billion. This left only GH₵61.9 billion available for discretionary spending.
However, the government’s wage bill alone reached GH₵78.9 billion, exceeding the remaining funds by approximately GH₵17 billion. This gap ultimately compelled the state to resort to borrowing just to pay salaries, a situation that has sparked sharp political debate and economic concern.
Finance Minister Dr. Cassiel Ato Forson, who disclosed the figures during a high-level engagement with organised labour, warned that the fiscal situation has become increasingly constrained.
He revealed that public sector wages accounted for 44 percent of total tax revenue in 2025—far above the 35 percent threshold recommended by the Economic Community of West African States (ECOWAS). The government was not able to meet its revenue targets for the 2025 as tax revenue dropped significantly.
According to him, the combined burden of wages, statutory payments, and debt servicing now exceeds the country’s total revenue, leaving little to no fiscal space for development. This has significantly limited government’s ability to invest in critical sectors such as healthcare, education, and infrastructure.
The situation has become one of the most difficult fiscal episodes for the Mahama administration since it assumed office in 2025. Reports suggest that the government has also faced persistent debt pressures, with obligations estimated at about GH₵280 billion over a four-year period, further tightening the fiscal space.
Critics have seized on the development, arguing that borrowing to pay salaries reflects a struggling economy and contradicts the government’s claim of robust economy. The issue has featured prominently in political discourse, with opposition figures pointing to earlier criticisms made by the current Finance Minister when he was in opposition.
As Minority Leader in 2023, Dr. Forson had strongly criticised excessive borrowing by the previous administration.
However, since taking office, he has acknowledged that borrowing cannot be completely avoided, insisting that it remains a necessary tool for managing the economy under current conditions.
Despite the criticism, the government maintains that it is committed to fiscal discipline and long-term recovery.
Ato Forson has indicated that future borrowing will be targeted at growth-enhancing projects rather than recurrent expenditure, stressing that investments in infrastructure and productivity will be key to restoring economic balance.
Former Finance Minister Seth Terkper has warned that Ghana remains vulnerable to external shocks, including fluctuations in global oil prices, which could further impact inflation, the cedi, and overall economic stability.
He noted that the Mahama administration initially faced limited access to international and domestic bond markets due to debt restructuring measures, forcing reliance on short-term instruments such as Treasury bills. This constraint, he explained, slowed investment in key sectors and affected job creation efforts.
While there are indications of gradual recovery, including improving credit conditions and renewed engagement with international partners like the IMF, analysts caution that the gains remain fragile. Without sustained fiscal discipline and structural reforms, Ghana risks slipping back into economic distress.
For now, the reality remains stark: a government grappling with limited resources, rising obligations, and the difficult task of balancing immediate needs—such as paying workers—with long-term development priorities.
