As the Mahama government strives to ensure fiscal prudence, it aims to limit the public sector wage bill to 33.8 percent of total domestic revenue.
In the 2026 budget statement and economic policy, the government has projected to rake in GH¢268.1 billion, up from GH¢226.5 billion in 2025, while compensation of employees (covering wages, salaries, pensions, gratuities, and social security contributions) is projected at GH¢90.8 billion (5.7 percent of GDP).
The public wage bill reflects the 9% negotiated increase in base pay for public servants under the Single Spine Salary Structure (SSSS).
This shows a drastic reduction in proportionate terms from the previous years where the public wage bill consumed between 60-70% of total domestic revenue. The reduction can be attributed to improved domestic revenue mobilisation and prudently managed public sector employment.
The Finance Minister during the budget statement presentation in Parliament, last week, indicated that the total revenue projection represents a strong revenue performance supported by new non-oil tax policy measures expected to yield at least 0.6 percent of GDP.
“Non-Oil Tax Revenue, which accounts for about 80.6 percent of total revenue, is projected at GH¢216.1 billion, reflecting a robust 18.8 percent annual growth”, Dr Cassiel Ato Forson read.
“Non-Tax Revenue (non-oil) is estimated at GH¢20.9 billion, representing about 7.8 percent of domestic revenue. Of this amount, GH¢18.2 billion will be retained by MDAs to support operations, while GH¢2.8 billion will be lodged into the Consolidated Fund. The IGF Capping Policy is expected to yield an additional GH¢329.6 million to the budget.
“Oil and Gas receipts are projected at GH¢13.6 billion, driven by improved efficiency across producing fields and steady global oil prices.”
On other sources of revenue mobilisation, Dr Ato Forson noted that, “…SSNIT transfers to the National Health Insurance Levy and Energy Sector Levies (ESL), is expected to amount to GH¢14.4 billion.
“Grants from Development Partners are projected at GH¢3.1 billion, equivalent to 1.1 percent of total revenue and grants. The expected disbursements from grants are entirely project-related to support key development initiatives in line with government priorities.”
To this, total revenue and grants are projected to rise steadily, from 16.0 percent of GDP in 2025 to 16.8 percent in 2026, and to 16.9 percent by 2029.
This growth will be driven by stronger tax administration, digitalisation of revenue systems,
improved compliance, and the full rollout of the Unified Taxpayer Identification System. The focus will be on broadening the tax base, not burdening existing taxpayers.
Revenue Measures
On the revenue side, the minister indicated that government will deepen domestic resource
mobilization through the implementation of the Medium-Term Revenue Strategy, thereby, improving tax compliance, expanding the tax base and deploying digital tools to track and tax e-commerce, cross-border transactions and the extractive sector.
In addition, the Government will execute VAT reforms.
“We will also tighten exemptions and enforce the payment of tax arrears, ensuring that all eligible entities pay their fair share.
“These measures are expected to lift non-oil revenue to 15.7 percent of GDP in 2026 from a projected 15.1 percent of GDP in 2025.”
By Adnan Adams Mohammed
