The 2025 Budget Statement sets out an ambitious economic plan for Ghana, addressing major issues such as high public debt, fiscal risks in key sectors, and improving public financial management. Key measures include realistic growth targets, revenue mobilization efforts, and the Big Push Infrastructure Programme aimed at sustainable growth. Overall, the budget is a roadmap for economic recovery and transformation.
The 2025 Budget Statement outlines an ambitious economic agenda for Ghana aimed at resetting the economy after facing significant inherited challenges. The nation is tasked with overcoming various economic difficulties, including a significant public debt, fiscal risks in vital sectors such as energy and cocoa, and deficiencies in public financial management. This budget aims to tackle these pressing concerns through strategic reforms to establish a more sustainable and inclusive growth pathway.
The budget acknowledges severe economic conditions, highlighting a high public debt that peaked in 2022, coinciding with Ghana’s loss of access to international capital markets. Consequently, the government engaged in a debt exchange program and sought liquidity assistance from the IMF. Many developing nations share similar debt challenges; however, Ghana’s debt servicing is particularly concerning, requiring GHS150.3 billion for domestic obligations and about US$8.7 billion for external debt from 2025 to 2028.
To address these pressing issues, the government has committed to measures such as implementing a sinking fund, restructuring debt, and cautiously re-opening the domestic bond market to alleviate liquidity pressures from high short-term debt obligations, which amount to GH¢111.1 billion in 2025.
The budget identifies considerable fiscal risks in the energy and cocoa sectors, both of which are crucial to Ghana’s economy. The energy sector faces a legacy debt of around US$1.73 billion owed to Independent Power Producers, compounded by a projected financing gap of GH¢35 billion in 2025. The cocoa sector experiences declining production—nearly a 50% drop over three years—due to various challenges, creating increased fiscal pressures for the government.
To remedy this, the government plans to renegotiate contracts with Independent Power Producers to lower capacity charges, enhance revenue collection through private sector involvement, and adjust cocoa pricing to minimize smuggling. These initiatives are essential for alleviating the financial strain these sectors exert on the national budget.
A major aspect of the 2025 Budget is the establishment of realistic growth targets. Although Ghana achieved a 5.7% GDP growth in 2024 primarily due to increased gold production, much of this growth was marred by illegal activities, resulting in US$5 billion in lost revenue. For 2025, the government conservatively projects real GDP growth at 4.00% and non-oil GDP growth at 4.80%, reflecting a strategic adjustment for sustainable growth amid existing structural issues.
Revenue mobilization represents a central pillar in the fiscal strategy of the 2025 Budget, featuring several tax reforms, including an overhaul of the VAT system and the removal of the COVID-19 levy. The government intends to increase the Growth & Sustainability Levy from 1% to 3%. On the expenditure front, a rationalization approach is promoted by eliminating programs such as the Ghana CARES initiative, generating savings of over GH¢1.8 billion and strengthening fiscal discipline through the reduction of wasteful spending.
Additionally, a significant aspect of fiscal strategy involves uncapping statutory funds, which will unlock over GH¢20 billion for priority initiatives, supporting crucial programs like the Big Push Infrastructure Programme and the Agriculture for Economic Transformation (AETA) program, which have historically lacked funding.
The Big Push Infrastructure Programme is a standout initiative in the 2025 Budget, intended to drive rapid infrastructure development across Ghana. This program emphasizes strategic investments in transport, energy, and technology, aiming to alleviate regional inequalities and stimulate economic growth by resolving longstanding infrastructure bottlenecks. The initiative also aligns with agricultural transformation efforts, thereby enhancing job creation and diversifying the economy.
The 2025 Budget is thus a thoughtfully crafted response to Ghana’s economic hurdles, reflecting realism in its approach to growth targets and fiscal discipline. The concerted effort towards expenditure rationalization, revenue reform, and critical infrastructure investments suggests a comprehensive strategy aimed at sustainable recovery and economic transformation, ultimately paving the way for inclusive growth and improved living standards for Ghanaian citizens.
In summary, the 2025 Budget represents a strategic and realistic approach to addressing Ghana’s economic challenges. By focusing on conservative growth forecasts, revitalizing fiscal discipline, and targeting key sectors such as infrastructure and agriculture, the budget lays a roadmap for the country’s economic recovery. The Big Push Infrastructure Programme is poised to deliver transformative benefits, enhancing resilience and driving sustainable economic growth. Overall, this budget serves as a reform-driven blueprint for Ghana’s prosperous future.
Original Source: www.ghanaweb.com
