The 2025 Ghana budget presented by Finance Minister Dr. Cassiel Ato Forson focuses on economic recovery and fiscal discipline amidst severe economic challenges. Key highlights include inflation and debt management, tax reforms, and social protection initiatives. Government spending cuts and a labor export program aim to stimulate growth while addressing urgent economic conditions.
In the 2025 budget presented by Finance Minister Dr. Cassiel Ato Forson under President John Mahama’s administration, key strategies focus on economic recovery, job creation, and fiscal discipline. Given the critical economic conditions, including high debt and inflation, the government aims to restructure debt, stabilize the cedi, cut wasteful spending, and implement pro-growth policies like a 24-hour economy.
Ghana’s economic conditions remain tough, with inflation rising from 23.2% in 2023 to 23.8% in 2024, exceeding set targets. Public debt currently stands at GH¢726.7 billion, equating to 61.8% of GDP, and there are significant arrears of GH¢67.5 billion, with road contractors owed GH¢21 billion. The energy sector is particularly affected, incurring GH¢20.8 billion in shortfalls in 2024, with an expected deficit of GH¢35 billion for 2025. Furthermore, the cocoa sector is in crisis, suffering a 50% production decline and COCOBOD facing GH¢32 billion in debt.
Fiscal measures in the budget propose significant spending cuts, including reducing the number of ministries from 30 to 23 and the total number of ministers from 88 to 60. There are plans for improved debt management through fiscal buffers and smoother repayment schedules, alongside the mandate for commencement certificates and procurement integration to control overspending. Additionally, wasteful programs like GhanaCARES, YouStart, and the One District One Factory initiative are to be eliminated, while the roles of Development Authorities will transfer to the District Assemblies. Notably, the establishment of a Ghana Gold Board aims to enhance exchange rate stability by accumulating foreign exchange reserves.
For 2025, ambitious macroeconomic targets have been set, including a real GDP growth rate of at least 4.0%, non-oil growth of at least 4.8%, an end-period inflation target of 11.9%, a primary balance surplus of 1.5% of GDP, and gross international reserves to cover at least three months’ worth of imports.
In terms of tax reforms, the government has abolished several taxes, including the E-Levy, betting tax, emission levy on industries and vehicles, and VAT on motor vehicle insurance. New adjustments proposed include increasing the mining levy to capture gold price windfalls and reintroducing road tolls, with digital payment systems.
Key initiatives in the budget promote a 24-hour economy to stimulate round-the-clock business operations, introducing “Big Push” infrastructure investments amounting to $10 billion aimed at roads, markets, and hospitals. The budget also emphasizes free first-year tertiary education through the “No-Fees-Stress” initiative, provides sanitary pads for schoolgirls, and increases school feeding funding. Furthermore, the tax refund ceiling is reduced from 6% to 4%, yielding savings of GH₵3.8 billion to counter revenue losses. A new labor export program is intended to formalize the migration of Ghanaian workers for jobs abroad.
Social protection allocations include GH₵499.8 million for free first-year tertiary fees, GH₵292.4 million for sanitary pads, and GH₵9.93 billion for the National Health Insurance Scheme (NHIS) that ensures free primary healthcare and the MahamaCares initiative. Increased funding is also directed toward LEAP, School Feeding programs, and the Capitation Grant, alongside technology-driven road tolls and improvements in non-tax revenue frameworks.
The 2025 Ghana budget emphasizes fiscal discipline and pro-growth initiatives amid a significant economic crisis characterized by high inflation and public debt. Major fiscal measures include spending cuts, tax reforms, and a labor export program. The budget also addresses social protection, notably education and health, seeking to stabilize the economy while fostering sustainable growth. Overall, the government’s approach aims to restore confidence through structured economic recovery strategies.
Original Source: techlabari.com
