The Global Economic Landscape and Its Implications for Developing Economies
Geopolitics often influences the economic trajectories of nations, especially when powerful global economies clash or compete. This dynamic can have a ripple effect on developing countries, much like the adage “if two elephants fight, it’s the ground that suffers.” The recent IMF-World Bank spring meetings in April 2026 highlighted this reality, as global economic tensions began to affect smaller economies.
IMF Managing Director Kristalina Georgieva expressed concerns about the decline in global growth, which fell from 3.4% in 2025 to 3.1% in 2026. She warned that in the worst-case scenario, global growth could drop to as low as 2%. This decline poses significant challenges for African economies, particularly those that import energy and have limited policy flexibility.
Georgieva emphasized that the impact of this decline would be asymmetric, with sub-Saharan African countries being among the most vulnerable. These nations face unique challenges due to their reliance on external resources and limited fiscal space.
Debt and Fiscal Challenges
Another critical issue discussed was the rising global public debt, which is projected to exceed 100% of GDP by 2029. This trend is alarming, as it has not been seen since 1948. For developing economies, this means increased pressure on their budgets and a need for stronger institutions and economic buffers to withstand potential shocks.
Public Financial Management (PFM) is at the core of these interventions. In the context of Ghana, PFM must be more than just a recommendation—it should be an operational reality within the governance structure and development framework.
Budget Under Pressure
The national budget is central to any PFM architecture, providing a roadmap for income, expenditures, and economic policies. Ghana’s 2026 Budget, themed “Resetting for Growth, Jobs, and Economic Transformation,” reflects efforts to stabilize its economy amid fiscal pressures. Debt restructuring under the IMF-supported program aimed to address these challenges.
According to the Bank of Ghana’s Summary of Economic and Financial Data Report (March 2026), Ghana’s public debt declined from 61.8% of GDP in December 2024 to approximately 45.3% by December 2025. This improvement was driven by debt restructuring, cedi appreciation, and fiscal consolidation. However, deeper structural pressures remain.
Compensation of government employees and interest payments consume a significant portion of public spending, leaving limited room for transformative investments in key sectors such as agriculture, infrastructure, health, and education. For instance, Ghana’s education spending stands at approximately 2.91% of GDP, below international benchmarks of 4-6%.
Ambitious Initiatives and Persistent Challenges
Despite these challenges, the 2026 Budget includes some ambitious initiatives. Financing for women-led enterprises through the Women’s Development Bank increased significantly from GH¢51.3 million in 2025 to over GH¢400 million in 2026. While this reflects a commitment to women’s economic empowerment, the question remains whether these allocations are part of a coherent, results-driven fiscal strategy.
When Weak Systems Become Dangerous
Public Financial Management (PFM) governs how public funds are raised, spent, and accounted for. A robust PFM system is essential for delivering sustainable services. A nationwide arrears audit revealed significant gaps in Ghana’s PFM systems, with many unpaid obligations and lack of documentation.
The audit highlighted years of weak commitment to controls, expenditure indiscipline, and routine regularization of overspending. The consequences of weak expenditure discipline were felt across the economy, including disruptions in essential programs like the Ghana School Feeding Programme.
The Amendment That Must Be More Than Words
The Public Financial Management (Amendment) Act, 2025 (Act 1136), aims to address persistent structural failures. It seeks to tighten financial commitment controls, strengthen enforcement of fiscal laws, and reinforce transparency. However, the challenge lies in effective implementation, as Ghana has long had frameworks in place but struggled with enforcement.
Programme-Based Budgeting was introduced to link spending to measurable outcomes, but consistent enforcement has been lacking. This has led to irregularities, corrupt practices, and wastage within the PFM ecosystem.
PFM as a Strategic and Prudent Tool
Global examples, such as Rwanda and Indonesia, demonstrate the importance of systematic PFM reforms. Rwanda’s focus on fiscal discipline and effective public services has earned it a global reputation. Similarly, Indonesia’s post-crisis reforms improved its fiscal position and enabled countercyclical responses.
Ghana must learn from these experiences and implement PFM reforms proactively rather than waiting for a crisis. Significant portions of public expenditure remain weakly linked to measurable outcomes, and cross-cutting priorities like gender equity and climate resilience need to be embedded in resource allocation.
At Crossroads
Ghana faces a critical juncture. With a rebounding economy and recent exit from an IMF program, it has the leverage to implement effective PFM measures. However, this requires political will, sustained commitment, and accountability at all levels of public service.
Fiscal discipline is no longer optional and must not be sacrificed for competing interests. Ghana must ensure and sustain fiscal discipline going forward, moving away from emergency responses and incorporating sound fiscal buffers into its PFM ecosystem.
