Ministries, Departments, and Agencies that present budgets to the Ministry of Finance for approval must brace themselves for a strong pushback as the President has granted the Minister an unfettered authority to cut government expenditure without fear or favor.
Although this new directive is in line with the government’s fiscal consolidation efforts, it is coming after the President discovered the true state of the economy.
President Mahama says the economy is worse than he ever anticipated. In his view, the previous government run the economy aground making the crisis deeper than he expected.
In a meeting with Organized Labour on Thursday, February 20, 2025, President Mahama revealed that the economy has been battered severely requiring more austerity measures.
“One thing that is a cardinal principle for us is to tell the truth at all times, we all knew that the economy was in crisis but some of the things I am discovering myself, have been a criminal handling of our economy, Ghana is a crime scene because how a government can be so reckless I can’t understand it,” President lamented to Organized Labour.
To resuscitate the economy which is grappling with ballooning public debt, limited fiscal space, high inflation, and depreciating cedi coupled with an IMF program, the president announced that he has granted the Minister for Finance full authority to cut expenditures as much as he deems fit.
“Our options are very few. We can behave like the ostriches and hide our heads in the sand and let the economy crash, but then what effect will it have on Ghanaian households and everybody?” he quizzed.
“I have told the Finance Minister to cut expenditure as much as he likes, even we ourselves in government machinery, cut as much of our budget as you like because we all must make those sacrifices,” he added.
A drastic government expenditure cut is a two-edged sword with both advantages and disadvantages.
Strict budgetary controls will compel actors to eliminate wasteful spending, ensuring that resources are channeled into essential services and economic stabilization. This aligns with public demands for accountability, as Ghanaians have long criticized excessive government expenditures amid economic hardships.
By reducing unnecessary costs, the government can demonstrate fiscal discipline and restore public confidence in its financial management. Additionally, cutting spending can help curb excessive borrowing, reduce the fiscal deficit, and position Ghana for sustainable growth and a potential return to the international credit market.
However, in the short term, these measures may lead to delays in infrastructure projects, put businesses that heavily depend on the government’s expenditure at risk, and create temporary economic hardships before long-term benefits are realized.
With this unlimited authority granted by President Mahama to Finance Minister, Dr. Cassiel Ato Forson, all eyes will be on him to see how he utilizes the power effectively to revive the economy through fiscal discipline.
