New economy model takes shape: Set for 2027 Budget - $1.6bn Private sector boost for jobs

The government is set to unveil an ambitious programme known as the “New Economy” to help transition the country’s economy from stability to accelerated development.

The New Economy programme, which is being fine-tuned for rollout in the 2027 Budget, will utilise about $1.6 billion, approximately one per cent of Gross Domestic Product (GDP), to develop key pillars of the economy to enable the private sector to leverage for the creation of jobs.

“The public sector (government) employing people is not sustainable, it will create more fiscal difficulties.

We need to create the environment necessary to attract the private sector to create jobs,” the Minister of Finance, Dr Cassiel Ato Forson, stated, saying the details would be outlined in the 2027 Budget expected to be presented to

Parliament in November.

“In the coming days, we will be announcing our flagship design called the New Economy, where we will be looking at areas of development and job creation, because from stability you build resilience, and from resilience you build an economy that will benefit the masses,” the Minister of Finance said at a press conference in Accra last Friday to announce the end of the country’s ECF programme with the IMF, and its achievements.

Dr Forson said the government would work with state-owned enterprises to end the losses and make them solvent enough to underwrite their own liabilities as they fall due. 

Context

Providing context for the programme, Dr Forson said that the country produced, on the average, 500,000 graduates who entered the job market every year, adding that there was the need to act decisively and quickly to find jobs for the youth.

The new programme, which has been approved by Cabinet, follows the country’s successful completion of the International Monetary Fund (IMF) Extended Credit Facility (ECF) $3 billion bailout programme implemented over the past three years.

The new home-grown flagship programme is expected to focus on building economic resilience and expanding opportunities that directly benefit citizens through sustainable growth and employment creation.

The proposed initiative will outline key sectors targeted for investment, economic transformation and job expansion as the government seeks to consolidate gains made under the IMF-supported reforms that have brought the country’s debt to GDP to the region of 45 per cent, providing enormous fiscal space for responsible growth-targeted spending.

The finance minister also explained that the programme would also operate under a new Policy Coordination Instrument (PCI) arrangement with the IMF, which would focus on reforms and technical support rather than financial assistance.

Economic strategy

Dr Forson explained that the government’s economic strategy under PCI would be built around three key stages — stability, resilience and development.

He stated that the country had already achieved macroeconomic stability under the IMF-supported programme and was now focused on strengthening resilience to support long-term economic growth and employment creation.

“Stability is done, and now it is time for us to develop and create jobs because from stability you build resilience, and from resilience you build an economy that will benefit the masses,” he said.

The finance minister added that the next phase of the government’s agenda would prioritise development initiatives capable of creating jobs and improving the living conditions of Ghanaians.

Capital market plans

When asked whether it would borrow from the Eurobond market, Dr Forson stated that the government was not in a hurry to return to the international capital market, in spite of the country’s successful completion of the IMF programme.

He explained that the 2026 budget had not made any provision for financing through the international capital market.

Rather, he said, any future decision to return would depend on the country’s medium-term economic strategy.

Dr Forson stressed that the new PCI arrangement was not another bailout programme but rather a reform-based framework intended to help Ghana sustain economic discipline and avoid future financial crises.

“We believe that we do not have a need to go for a bailout currently, but it does not mean we should lower our guards because indiscipline is what has landed Ghana on a number of bailout programmes,” he said.

IMF outlook

The Division Chief of the African Department at the IMF, Ruben Atoyan, stated that Ghana’s faster-than-expected fiscal consolidation had created additional fiscal space that could now be directed towards economic growth, job creation and strategic investments.

He explained that the gains achieved under the IMF-supported reforms reflected strong policy implementation and provided a solid foundation for the government’s next phase of economic transformation.

Mr Atoyan, however, cautioned that risks still remained, particularly from state-owned enterprises and quasi-fiscal activities outside the central government’s control, which had historically contributed to Ghana’s debt challenges.

“Strong policy efforts generated the initial fiscal space, and we are now discussing how to use it to support economic growth, employment and strategic investments, which represents a remarkable turnaround for Ghana,” the IMF’s sixth review mission chief said.

PCI arrangement

Mr Atoyan explained that the new PCI arrangement would run for 36 months, with the IMF expected to consider Ghana’s request at the end of next month, alongside the final review of the ECF programme.

He stated that the PCI was designed to support Ghana’s reform agenda through policy commitments and semi-annual reviews to signal confidence in the country’s economic direction to investors and international markets.

“We believe the lessons from the 2022 crisis have been internalised and the focus now is on building resilient domestic institutions that can sustain stability and prevent future fiscal shocks,” he said.

Mr Atoyan added that although the Bank of Ghana had recorded negative equity, the central bank remained policy solvent because it continued to generate enough income to cover its operational and monetary policy costs. 

Investor confidence

An economist and former Director of the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, told the Daily Graphic that the PCI arrangement would help the country to sustain the gains achieved under the IMF-supported programme through continuous policy guidance and monitoring.

He explained that although the arrangement would not provide direct financial support, it would strengthen investor confidence by assuring the international community that Ghana remained committed to fiscal discipline and macroeconomic stability.

“We are likely to attract more investment because the PCI will help ensure that we continue to do the right things and keep the macroeconomic environment in check,” he said.

However, Prof. Quartey cautioned that the success of the arrangement would depend on the government’s willingness to implement the recommended reforms and maintain fiscal discipline.

He urged the government to prioritise agriculture, manufacturing and digital technology as key sectors capable of accelerating economic growth and creating sustainable employment opportunities for the youth.