Pursuant to Articles 179 and 180 of the 1992 Constitution of the Republic of Ghana and sections 21 and 23 of the Public Financial Management Act, 2016 (Act 921), Finance Minister Dr. Cassiel Ato Forson presented the new government’s first budget statement to parliament yesterday.
He reiterated government’s commitment to implementing the 24-hour economy, emphasising its potential to create jobs and drive sustainable economic growth. However, the proposed 24-hour economy policy will be formally presented to parliament in due course.
Following government’s avowed decision to abolish several taxes, including the E-Levy, Betting Tax and COVID-19 Levy, the finance minister outlined strategic measures to address the fiscal gap that will arise from its decision.
The abolition of selected taxes will be offset by reducing the tax refund ceiling. Government will cut the tax refund ceiling from 6% to 4% of total revenue, saving GH₵3.8billion. He further explained that the tax Refund Account has been mismanaged in recent years, with large sums being misapplied.
Additionally, the Revenue Administration Act will be amended to increase tax efficiency and ensure greater compliance – with government expecting a 2% improvement in net tax revenue collection.
Government plans to simplify Ghana’s VAT system and eliminate distortions that have led to inefficiencies in tax collection.
The cocoa sector, the minister announced, is sadly on its knees and unable to support the economy as it should despite record-high world market prices. The sector faces declining output and financing challenges characterised by unsustainable debt, rollover contracts and quasi-fiscal expenditures including cocoa roads – a non-core function.
“The rolled-over contracts will result in additional losses of US$495million this year.”
Generally, fiscal performance in 2024 was characterised by improved revenue collection but with significant expenditure overruns
Government will implement a number of measures to complement Bank of Ghana monetary and exchange rate policies to stabilise inflation and the exchange rate. They include establishing the GoldBod to enhance generation and accumulation of forex to support the cedi’s stability.
Also, BoG will continue to implement its FX forward auctions to support stability of the cedi and strong fiscal consolidation through the reduction in public sector spending and the fiscal deficit will reduce pressures on the exchange rate.
Dr. Cassiel Ato Forson said government is focused on “restoring hope and cushioning the vulnerable in our society”.
Key among the initiatives is implementation of Free Tertiary Education for all Persons with Disabilities, as well as the ‘No-Fee-Stress’ policy which removes academic fees for all first-year students in public tertiary institutions.
“Government has allocated GH¢499.8million to implement the ‘No-Fee-Stress’ policy”.
To improve menstrual hygiene and school attendance among adolescent girls, government has also earmarked GH¢292.4 to provide free sanitary pads to girls in primary and secondary schools.
The School Feeding Programme has also received a significant budgetary boost, increasing from GH¢1.344billion in 2024 to GH¢1.788billion in 2025, with the cost of feeding per pupil per day rising from GH¢1.50 to GH¢2.00 – a 33% increase.
In the health sector, the National Health Insurance Levy (NHIL) has also been uncapped – with GH¢9.93billion allocated to the NHIS to fund claims, vaccines and new initiatives like Free Primary Healthcare and MahamaCares for non-communicable disease treatment.
Meanwhile, the Road Fund and DACF have been uncapped; allocating GH¢2.81billion for road maintenance and GH¢7.51billion to District Assemblies, with at least 80% of the latter to be spent directly at district level to deepen decentralisation.
Government is trying to lay the foundation for a more inclusive society while creating opportunities for all citizens to thrive. Ghana’s Gross Domestic Product (GDP) is projected to rise to 4.4 percent by end-2025.
The projected GDP growth is seen as a crucial indicator of Ghana’s economic recovery following years of challenges, including impacts of the COVID-19 pandemic, inflationary pressures and external debt burdens.
