By Samuel Lartey(Prof)
Ghana stands at an economic crossroads, facing a pressing need for structural reforms to reset its economic trajectory.
The insights presented by Hon. Dr. Cassiel Ato Forson, Minister for Finance, at the National Economic Dialogue on March 3, 2025, highlight the nation’s economic growth patterns, fiscal challenges, and opportunities for sustainable prosperity.
The economic challenges of 2022, exacerbated by external shocks and internal structural deficiencies, have necessitated urgent interventions to realign Ghana’s growth model.
This article delves into the key themes from the Minister’s presentation and explores their implications for Ghana’s socio-political and economic landscape, government initiatives, corporations, businesses of all sizes, and the ordinary Ghanaian citizen.
Economic Growth and the Need for a Reset
Ghana has enjoyed strong economic growth since the 2000s, with an average GDP expansion of 6.8% per annum between 2008 and 2019, surpassing regional and global averages of 4.4% and 2.7%, respectively. However, this growth has been disproportionately driven by the oil and mining sectors, leading to an imbalanced economy overly reliant on natural resources.
In 2022, public debt surged to 93% of GDP, a sharp rise from 20% in 2006, highlighting unsustainable fiscal practices. Despite achieving middle-income status in 2011, Ghana’s economic growth has not translated into structural transformation, employment generation, or poverty reduction.
The economy remains heavily reliant on gold, crude oil, and cocoa, which together accounted for 85.1% of total exports in 2024. This limited diversification exposes Ghana to commodity price shocks, perpetuating economic vulnerability.
Without urgent reforms, Ghana risks stagnating, failing to fully capitalize on its demographic dividend, with 500,000 young people joining the labor force annually. To prevent economic deceleration to 3.8% GDP growth by 2035, the government must implement ambitious reforms to foster productivity and human capital development.
- Fiscal Challenges and Opportunities
- Public Spending and Debt Burden
Ghana’s fiscal space has been constrained by high interest payments, excessive energy subsidies, and inefficient public spending. Government expenditure has outpaced GDP growth, with public sector wages, interest payments, and earmarked funds consuming 70% of total expenditure.
As of 2024, Ghana’s fiscal deficit remains a critical issue, fueled by spending indiscipline and weak expenditure controls. Public infrastructure projects, including the Agenda 111 hospital initiative, have faced inefficiencies, with US$400 million spent over four years without a single operational hospital, while an additional US$1.5 billion is required for completion.
Revenue Mobilization and Taxation
Ghana’s tax revenue collection, at 13.5% of GDP in 2023, lags behind peer countries, with VAT collection particularly low. Tax exemptions on VAT, personal income tax (PIT), and import duties resulted in revenue losses amounting to 3.9% of GDP in 2021.
The inability to capture economic rents from natural resources further limits fiscal space, with extractive industry revenues contributing only 1.5% of GDP despite resource rents totaling 14% of GDP. Rationalizing tax expenditures, improving compliance, and broadening the tax base are necessary measures to increase domestic revenue mobilization.
Implications for Ghana’s Socioeconomic and Political Landscape
Government Initiatives and Policy Reforms: The government must prioritize fiscal consolidation while ring-fencing social programs and growth-enhancing expenditures. Reforms in public financial management, procurement systems, and state-owned enterprises (SOEs) such as COCOBOD and the Electricity Company of Ghana (ECG) are essential. The energy sector remains a “ticking time bomb,” with annual shortfalls projected at US$2.2 billion by 2025, necessitating reforms to reduce inefficiencies and ensure financial sustainability.
To foster sustainable development, Ghana must shift from natural resource dependence to a productivity-driven economy. Investments in industrialization, technological innovation, and skills development will be critical. Strengthening local manufacturing to leverage trade agreements like AfCFTA (African Continental Free Trade Area) can drive economic diversification and job creation.
Impact on Corporations and Businesses
Large corporations and multinationals operating in Ghana must navigate evolving tax policies and public expenditure shifts. Government-led infrastructure investments and economic restructuring could create new business opportunities, but firms must adapt to increased regulatory scrutiny and tax compliance measures.
Medium and small enterprises (SMEs), which constitute the backbone of Ghana’s economy, require targeted support through financial inclusion initiatives, access to credit, and improved business environments. With over 70% of Ghana’s workforce engaged in the informal sector, policies that facilitate formalization, digitalization, and financial literacy will be essential for SME growth.
Prospects for the Ghanaian Citizenry
For the average Ghanaian, economic stability will hinge on government interventions to curb inflation (which stood at 23.5% in early 2025), stabilize the exchange rate, and improve job opportunities. The lack of structural transformation has left many workers in low-productivity sectors, such as wholesale and retail trade. Expanding employment in high-productivity sectors like agro-processing, renewable energy, and digital services will be key to improving living standards.
Education reforms must address inefficiencies, with a focus on pre-primary and primary education funding. Currently, a significant portion of education spending is allocated to secondary and tertiary levels, limiting early childhood education quality and accessibility. Redirecting resources towards foundational education and skills training can better prepare the workforce for future economic demands.
Conclusion
Ghana’s economic reset is not just an economic necessity but a sociopolitical imperative. The country must transition from a debt-driven, resource-dependent growth model to one that prioritizes industrialization, human capital development, and fiscal prudence. Government-led reforms, corporate adaptations, and citizen engagement are critical to ensuring a prosperous and resilient economic future.
The roadmap outlined by Hon. Dr. Cassiel Ato Forson provides a framework for achieving sustainable growth, reducing inequality, and positioning Ghana as a competitive player in the global economy. With decisive action, Ghana can harness its demographic dividend, foster economic transformation, and secure prosperity for all in 2025 and beyond.
