“These boom-and-bust cycles must cease”
On the evening of Thursday, November 12, 2026, the Minister for Finance, Dr Cassiel Ato Forson, when presenting the 2027 budget, told Parliament that Ghana’s boom-and-bust cycles must cease. Few Ghanaians would disagree. Too many times we have lived through hope followed by hardship, a stable cedi followed by sharp depreciation, and a recovery followed by another crisis.
I have read the full 2027 Budget Statement, and I want to answer one question. Does the Minister appreciate why the boom-and-bust cycles happen, and does his New Economy programme remove the cause?
My answer is that the Minister has made the right diagnosis but prescribed an incomplete cure. The budget sees two causes clearly. It misses a third, and the third is the one that will bring the next bust.
What the budget gets right
The budget statement is more candid about the causes of our instability than most budgets before it. It says the cedi came under pressure “when prices dropped or fiscal discipline weakened” (para. 161). It concedes that “temporary booms had financed permanent commitments” (para. 168), and it blames reckless spending, weak revenue and expensive debt for the crisis of 2022.
Most importantly, the budget statement admits that past governments repaired the public finances “but did not use the recovery to alter the structure of the economy,” and so “the cycle began again” (paras. 186–187). It even pledges that fiscal discipline “will apply throughout the election cycle” (para. 239).
So the Government does understand two causes: our dependence on raw commodity exports, and fiscal indiscipline. I accept both. My quarrel is with what is missing.
The machine that is not in the plan
Read the eight pillars of the New Economy and one thing stands out. The only imports the budget counts as a drain on the cedi are things we consume: rice, sugar, poultry, fish, vegetables and medicines. It says the food import bill “weakens the cedi” (para. 260). It promises that when Ghana grows and processes more, “the cedi will face less pressure” (para. 336). It demands that every cedi of fiscal space answer the question: “what imports will it replace?” (para. 191).
The budget never asks that question of the factories themselves. Throughout the statement, machines are things to buy and finance:
the “manufacturer investing in new machinery” is offered equipment leasing (paras. 228, 231);
the rice hubs receive tax incentives for “irrigation, mechanisation, silos, modern mills” (para. 276);
GH¢800 million is allocated “to procure agricultural machinery” (para. 1543);
the review of Chapter 98 of the Customs Tariff concerns duty concessions on imported “machinery and other inputs” (para. 860);
the textiles pillar promises jobs for machine operators, not machine makers (para. 448);
for the nuclear plant, “international partners will only provide technology, finance, engineering and specialist services” (para. 380).
Cocoa grinding mills, gold refineries, alumina plants, rice mills, garment lines and pharmaceutical plants are all capital goods. Ghana makes almost none of them, and few of their spare parts. Every one will be imported and paid for in dollars, and every one will be kept running with imported spares, also paid for in dollars.
The arithmetic
The budget’s own figures show where the capacity to make machines stands in the Government’s order of priorities.
2027 allocation
Amount
New Economy programme, 2027 outlay (para. 249)
GH¢30 billion
Procurement of agricultural machinery (para. 1543)
GH¢800 million
Completion of the Foundry and Machine Tooling Centre (para. 1582)
GH¢51 million
GRATIS Foundation, whole year, no capital expenditure (Appendix 4A)
about GH¢3 million
The Foundry and Machine Tooling Centre is the one line in this budget about making machines rather than buying them. The Centre dates from my time as Minister for Environment, Science, Technology and Innovation, and six years after I left office, it is still waiting to be completed. In 2027 it receives about 0.17 per cent of the New Economy outlay, and one-sixteenth of what we will spend on imported farm machinery in the same year. GRATIS, built to carry engineering capability into the regions, receives less than half of one per cent of the machinery budget.
Nothing in the New Economy programme is set aside for machine tools, foundries, spare parts or engineering manufacturing.
How the next bust will come
Suppose the New Economy succeeds exactly as planned. By 2030 Ghana processes all its cocoa, refines all its gold, processes all its manganese and bauxite and mills its own rice. Food imports fall, export earnings per tonne rise, and the cedi strengthens.
But each of those plants was built with imported equipment, and each needs a steady flow of imported spares, replacement parts and, in time, replacement machines. When a mill breaks down, it cannot wait for the cedi to recover. It must buy the part at whatever the exchange rate happens to be. This demand for foreign exchange is stubborn, and it grows with every factory we open.
The budget itself names commodity price volatility as the first of its five principal risks (para. 1025). When commodity prices next fall, export earnings will drop, but the bill for machines and spares will not. The cedi will come under pressure again, and the cycle will begin again, at a higher level of output but under the same ceiling. That is the trap of an economy that assembles but does not make. Value addition on imported capital goods moves the bottleneck; it does not remove it.
There is a fiscal test as well. The programme is financed partly by lowering the primary surplus target by one percentage point of GDP (para. 247), beginning in the year before an election. The Government will answer that a surplus of at least 0.5 per cent of GDP remains (para. 221), and that is a fair answer. But the pledge of discipline “throughout the election cycle” will be tested in 2028, and Ghanaians have heard such pledges before.
What a complete cure would require
The modern world economy is knowledge-based and driven by science and technology. Societies that produce, adapt and commercialise knowledge have achieved sustained growth and rising living standards. Raising money to pay foreign contractors to build infrastructure, good as the projects may be, cannot by itself lead to sustained economic development. Ghana has to develop the capacity to build the machines its industries run on.
The cure is not to abandon value addition. It is to add the pillar the plan lacks: the capacity to make the machines.
Make capital goods a ninth pillar of the New Economy, with its own budget, targets and delivery unit, as the other eight have.
Fund the Foundry and Machine Tooling Centre to operate, not merely to be completed, and link it to the processing enclaves as a supplier of spare parts.
Establish the Design and Manufacturing Technology Centre called for at the conference of Ghanaian scientists and engineers that the Ministry of Environment, Science, Technology and Innovation and the Ghana Institution of Engineering convened at Peduase in January 2019. The foundry can cast and machine parts; the Centre would let Ghana design the machines themselves, working with the processing enclaves on the equipment they need.
Apply the budget’s own local-preference principle to machines. If public money spent on rice must buy Ghana rice (para. 283), public money spent on silos, mills, dryers and processing equipment should, where quality allows, buy from Ghanaian fabricators: Suame Magazine, the regional centres of GRATIS, KNUST’s Technology Consultancy Centre, and the private engineers who have already shown what they can do.
Reform Chapter 98 so that duty concessions on imported machinery are matched by incentives to make the same machinery here, and are phased down as local capacity grows.
Judge every New Economy project by its import content, not only by the jobs and exports it creates.
The question every factory must answer
The Minister asked every cedi of fiscal space to say which imports it will replace. I ask the same question of every factory the New Economy will build. Until Ghana can make at least some of the machines that make its goods, our booms will be paid for in dollars we will not have when the bust comes.
The diagnosis in this budget is right. The cure is not yet complete.
© 2026 Prof. Kwabena Frimpong-Boateng.