Low Capital Expenditure Exposes Gov’t “Smoothness Level” -On Infrastructure Development

The Institute of Fiscal Studies (IFS) has confirmed criticisms of the Akufo Addo administration that it has not shown a commitment to infrastructure projects in Ghana in the past three years of its tenure.

The IFS late last week revealed how the government has consistently withheld funds from new long term infrastructural projects which are essentially a country’s long-term assets

Mr Leslie Dwight Mensah, an Economist at the IFS, laid down the facts from available data: “In recent years, however, the behaviour of capital expenditure is simply alarming. This is because the nominal values of capital expenditure itself are declining at a fast pace. Standing at GH¢7.7 billion in 2016, the nominal value of capital expenditure declined to GH¢6.3 billion in 2017, and further to only GH¢4.6 billion in 2018.”

In 2019, the Finance Ministry pulled a fast one on economic watchers by claiming the government was going to expend GHC 8.5 in capital expenditure, however, a few months afterwards during the mid-year budget review he slashed the amount back to levels equivalent to 2016.

“… in the mid-year budget, government has slashed this amount by one-tenth (GH¢819.9 million) to GH¢7.7 billion, about its 2016 level,” Mr. Mensah noted.

The abysmal levels of the current government’s capital expenditure is reflected in its proportion to the GDP which as low as it was in 2015- at 2.2 per cent of GDP.

Conversely while the government is not showing interest in Ghana’s long term assets, it is blowing funds on recurrent expenditures such as Goods and Services, „Over the same period, expenditure on goods and services grew from 0.8 per cent of GDP to a projected 2.0 per cent of GDP in 2019, which is nearly as much as what is going into capital investment.”

The Akufo Addo administration has been under fire for not investing in infrastructure like its immediate predecessors yet had accumulated more public debt that all of them combined.

Under the administration, road contractors have been up in arms for almost three years over unpaid arrears for road projects. Also, partly completed projects like hospitals, school buildings, among others have virtually been abandoned completely.