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3. The potential implications of graduation for fulfilling SDGs

The Government of Ghana has indicated that the public budget will be a main instrument to push forward the SDGs[8], and the recent public financial management reform is intended to provide the necessary budget credibility, predictability and comprehensiveness to reach this goal. However, the recent growth slowdown, large and persistent fiscal and current account deficits, the rising debt burden and debt service commitments and low public investment levels are posing a challenge when Ghana at the same time is trying to implement a strategy for the fulfilment of the SDGs.

Recognizing this, the Government of Ghana has adopted a multiyear deficit-reduction plan in response to the deteriorating fiscal situation. However, according to World Bank (2017) this effort has in the past only been implemented with limited success. Figures for 2017, however, indicate that the government managed to achieve a significant reduction in the fiscal deficit for 2017 in spite of lower revenues than programmed (IMF, 2018). A particular challenge is, according to the World Bank, that Ghana’s public investment management capacity is weak and reforms are needed (World Bank, 2017).

The capacity constraint as well as political budget cycles and short-term considerations seem to have dominated fiscal management and have been mentioned as important reasons for the substantially fluctuating public spending[9]. Moreover, some of the latest reports show government spending around 20 percent of GDP with only 1/3 of the expenditures earmarked for social sectors (education and health). Most of the remaining 2/3 are spending related to public administration (including debt service)[10]. Social and economic spending has thus decreased substantially (as a share of GDP) in recent years, and it is a concern whether fiscal management – in spite of stated intentions - will allow Ghana to place more focus on sectors that are important for fulfilling the SDGs, such as the social sectors and the agricultural sector.

World Bank (2017) describes the consequences of Ghana’s current fiscal situation in relation to these important sectors for SDG fulfilment. First, education spending currently represents the largest share of the government’s social sector spending activities. Significant investments have been made to improve service delivery through hiring an additional 150,000 teachers from 2009 to 2015; equivalent to almost a doubling of the number of teachers across primary, secondary and tertiary schools. By reducing teacher-pupil ratios and by improving the share of trained teachers, a positive student achievement effect would be expected. However, according to World Bank (2017) this expected quality effect remains to be seen. It is further concluded that education spending has not increased as a share of the total government budget in recent years, but there is significant room for improvements in budget management.

Second, compared with the overall development in Ghana, the health sector is lagging behind, and public health spending in Ghana is low by international standards. However, 18,000 new health workers were hired between 2009 and 2015 to facilitate a service delivery upgrade, and continued support from the donor community to the sector has enabled an increase in per capita health spending over the past decade. There is, however, concern about public capital investments in the sector, and progress in coverage of essential health services has not been impressive. A focus on both allocative and technical efficiency of health spending is therefore called for. With the current fiscal budget challenges and without significant sectoral allocations within the budget, Ghana’s external development partners may have to continue to play an important role in financing prevention-focused public health programs if the country is going to stay on track regarding the fulfilment of the SDGs.

Finally, the agricultural sector is crucial for the future development of Ghana and the likelihood of fulfilling the SDGs, although it constitutes a relatively modest share of GDP.

The main reason is that a relatively large share of the 300,000 people entering the work force each year must be employed in agriculture. However, public spending on agriculture continues to be relatively low and significantly lower than the 10 percent of the public budget benchmark committed to under the Maputo Declaration[11]. Besides serious underinvestment in the agricultural sector, public agricultural resources have been allocated to relatively few agricultural sectors with the majority share accruing to the cocoa sector. Donors have financed a large part of investment expenditures in agriculture, but according to World Bank (2017), the targeting has been weak and too focused on the cocoa sector. Overall, the general underinvestment in agriculture and poor targeting of investments have resulted in a relatively uncompetitive agricultural sector. Given Ghana’s current fiscal situation, future investments in agriculture will likely hinge on both the donor community and private investors if the aim of achieving the SDGs is to be met. There is, however, a need to rethink how to promote agricultural efficiency in order to ‘make agriculture great again’.

[8] See Government of Ghana (2018).

[9] It could be added that analyses have found significant variations between budgeted and actual expenditures and explained these deviations as results of political influence on the allocation processes (see e.g. Abdulai and Hickery, 2014). According to World Bank (2017) the 2016 election increased financial requirements by 3 percent of GDP compared to 1.5 percent during previous elections.

[10] This also implies that almost all tax revenues are used to finance salaries and debt interest payments (IMF, 2018).

[11] Maputo Declaration on Agriculture and Food Security in Africa (Assembly/AU/Decl. 7(II)). Second Ordinary Assembly of the African Union, 10-12 July, 2013, Maputo.


This page forms part of the publication "Evaluation Study – Graduation and Development Finance in the SDG Era – A Case Study of Ghana, May 2018" as chapter 3 of 9.
Version no. 1.0, 2018-06-27
Publication may be found at the address http://www.netpublikationer.dk/um/evaluation_case_study_ghana_may_2018/index.html