2026 Budget: Gov’t targets fiscal discipline, business-friendly tax regime

 Joshua Worlasi AMLANU & Ebenezer Chike Adjei NJOKU

The government is doubling down on fiscal discipline and structural reforms in 2026 as it seeks to sustain the macroeconomic stability achieved in 2025 and pivot the economy toward transformation and job creation.

Presenting the 2026 Budget Statement and Economic Policy to Parliament, finance minister Dr. Cassiel Ato Forson said the fiscal plan represents “the next phase of national renewal” and will focus on consolidating stability, accelerating economic transformation, and promoting inclusive growth.

The finance minister emphasised that after a year of rebuilding confidence and restoring stability, the government’s task in 2026 is to translate those gains into tangible improvements in living standards.

“The choices we made in 2025 have restored macroeconomic stability and rebuilt trust in our fiscal institutions. The task before us now is to turn that stability into sustained progress,” he said.

The 2026 budget sets out three main priorities: maintaining fiscal discipline, stimulating job creation through large-scale investments and strengthening the social and security sectors.

The government is targeting a primary surplus of 1.5 percent of gross domestic product (GDP) and intends to sustain single-digit inflation and exchange rate stability to preserve the gains made in 2025.

Building blocks

The Minister indicated that the government seems to build on the recent past as the nation recorded one of its strongest fiscal recoveries in decades in 2025, with the primary balance shifting from a 3 percent deficit in 2024 to a 1.6 percent surplus by September 2025, outperforming targets and signalling restored fiscal discipline.

He credited the turnaround to tighter spending controls and improved revenue mobilisation, noting that the removal of the e-levy did not weaken collections but strengthened compliance. Non-oil tax revenue rose to 8.7 percent of GDP from 7.8 percent, while falling Treasury bill rates saved about GH¢8.8 billion in interest costs.

The improvement extended to public debt, which fell from GH¢726.7 billion, or 61.8 percent of GDP, in 2024 to GH¢630.2 billion, or 45 percent of GDP, by October 2025, one of the largest declines in Ghana’s history.

The country also recorded a negative debt accumulation rate of 13.3 percent, reflecting prudent borrowing, fiscal restraint, and a stronger cedi that together restored investor confidence.

Market conditions also improved in tandem as teasury yields dropped more than 1,600 basis points, with the 91-day bill at 10.7 percent, the lowest in 14 years, while the government cleared GH¢20.3 billion in bond coupons, reviving liquidity and market trust. Eurobond prices rose 17 percent, yields declined 300 basis points, and investor sentiment strengthened.

“2025 marked one of Ghana’s strongest fiscal turnarounds in decades. The primary balance on commitment basis swung from a 3 percent deficit in 2024 to a 1.6 percent surplus by September 2025, exceeding the target and proving that discipline delivers results,” Dr. Forson told parliament.

The fiscal gains have drawn international recognition, with Fitch, Moody’s, and S&P all upgrading Ghana’s sovereign ratings in 2025, citing stronger policy credibility and a sustainable path toward debt stability.

Fiscal stability and revenue strategy

Central to the budget is a comprehensive fiscal strategy built on prudent spending, improved tax compliance, and a fairer tax system. The government aims to lift non-oil revenue to 15.7 percent of GDP in 2026 from an estimated 15.1 percent in 2025, through tighter enforcement and digitalisation of tax administration.

Dr. Forson said the government will roll out reforms to modernise the value added tax (VAT) system and simplify compliance for businesses. The changes include abolishing the COVID-19 Health Recovery Levy, reducing the effective VAT rate from 21.9 percent to 20 percent, and increasing the VAT registration threshold from GH¢200,000 to GH¢750,000.

The reforms also abolish VAT on mineral reconnaissance and prospecting while extending the zero-rating for locally manufactured textiles until 2028.

“These VAT reforms will make Ghana a more business-friendly economy and create the opportunity for business expansion and more jobs,” the finance minister told lawmakers.

The reforms are expected to give back about GH¢5.7 billion to businesses and households in 2026, with GH¢3.7 billion coming from the removal of the COVID-19 levy. Dr. Forson said the decision reflects government’s intent to ease the cost of doing business and strengthen the link between tax policy and industrial development.

Small and medium-sized enterprises are set to benefit significantly from the higher VAT threshold, which is meant to ease administrative burdens and reduce the cost of tax compliance.

“The increase in the VAT threshold is expected to make VAT administration simpler and easier to implement,” he said.

Digitalisation and tax modernisation

The Ghana Revenue Authority (GRA) is also expected to introduce new digital tools to strengthen tax administration. These include the rollout of fiscal electronic devices to monitor taxable transactions, digital platforms to collect VAT on cross-border e-commerce, and a public VAT reward scheme that encourages citizens to collect receipts for purchases.

Dr. Forson said these tools are part of a broader effort to build transparency and accountability in revenue collection.

“This is not just a tax reform, it is a step toward a more predictable and business-friendly economy,” he added.

Comprehensive review of tax laws

Beyond VAT, the Finance Ministry is expected to begin a full review of the Income Tax Act, Customs Act, and Excise Duty Act to align them with global best practices. The overhaul aims to simplify compliance, promote equity, and ensure that multinational and digital companies pay their fair share of taxes in Ghana.

The review of the Customs Act will prioritise trade facilitation and efficiency at Ghana’s borders, drawing on World Trade Organisation and World Customs Organisation standards. The Excise Duty Act will also be revised to reflect international trends in taxing carbon-intensive and unhealthy products, aligning with environmental and public health goals.

“We are laying the legal and policy foundation for a tax system that keeps pace with global trends, strengthens investor confidence, and delivers sustainable revenues to power our national transformation,” Dr. Forson said.

Tackling revenue leakages and strengthening port systems

To address persistent revenue losses at the ports, the government plans to deploy artificial intelligence-driven pre-arrival inspection systems to detect under-invoicing and misclassification of goods. The measure is expected to improve efficiency and boost customs revenue.

In 2024, imports valued at GH¢204 billion were recorded, yet only GH¢85 billion was deemed taxable due to weak classification and valuation processes.

The finance minister said the new AI-based systems will help close such loopholes and enhance customs’ ability to combat smuggling and illicit trade.

“This technology will detect under-valuation, flag high-risk goods, and strengthen Customs’ capacity to protect national revenue and security,” he noted.

Spending reforms and expenditure discipline

On the expenditure side, the government is moving to rationalise spending by eliminating low-value programs and capping non-essential expenditures such as foreign travel, workshops, and vehicle purchases. Funds saved from these measures will be redirected to infrastructure, energy, agriculture, and education projects that directly impact job creation.

Priority will also be given to flagship programs such as the ‘24-Hour Economy’ initiative and the ‘Big Push’ infrastructure program, which aim to expand productive capacity and attract private investment.

The budget reinforces social protection commitments, maintaining funding for the Livelihood Empowerment Against Poverty (LEAP) program, the National Health Insurance Scheme, the School Feeding Programme, and free secondary education.

To improve efficiency and transparency in public spending, the government will integrate the Ghana Electronic Procurement System (GHANEPS) with the Ghana Integrated Financial Management Information System (GIFMIS) and strictly enforce sanctions under the Public Financial Management Act for non-compliance and arrears accumulation.

A payroll validation exercise to remove ‘ghost names’ from the public payroll will continue, alongside quarterly expenditure reviews and real-time audit monitoring.

Dr. Forson stressed that fiscal discipline will remain central to government policy.

“Fiscal discipline is not an end in itself. It is the bridge between stability and progress, between policy promises and real improvement in the lives of Ghanaians,” he also said.

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