The Centre for Economic Research and Policy Analysis (CERPA) has conducted a comprehensive review of Ghana’s 2025 Budget Statement and Economic Policy, highlighting both the strengths and concerns associated with the government’s fiscal agenda.
While the budget outlines ambitious initiatives aimed at economic recovery, job creation, and infrastructure development, CERPA underscores the need for a well-balanced and sustainable approach to fiscal management.
Key Findings and Observations
- Economic Growth and Fiscal Discipline
- Ghana’s GDP grew by 5.7% in 2024, surpassing projections, yet growth is expected to slow to 4.0% in 2025, trailing Sub-Saharan Africa’s estimated 4.2% growth rate.
- Inflation remains a challenge, closing at 23.8% in 2024, well above the 15% target, with an optimistic projection of 11.9% for 2025.
- Fiscal consolidation measures aim to reduce the budget deficit to 4.1% in 2025, down from 5.2% in 2024, but achieving this will require disciplined expenditure control.
- Revenue Mobilization and Taxation
- The government has abolished six tax items, including the 1% e-levy and the COVID-19 levy, to provide relief to households and businesses.
- New taxes, such as the 2% Growth and Sustainability Levy on mining companies and the reintroduction of road tolls, pose concerns about their potential impact on business productivity and growth.
- CERPA recommends a more structured approach to tax reform, ensuring revenue sustainability while fostering private sector growth.
- Public Debt and Expenditure Management
- Ghana’s total public debt surged to GHS 726.6 billion in 2024, raising concerns about long-term fiscal stability.
- While the government has reduced its projected expenditure for 2025 to GHS 269.1 billion (a 3.6% decrease from 2024), prudent allocation of resources to growth-driven sectors is essential.
- Enhanced debt management strategies, including domestic revenue mobilization and expenditure efficiency, are critical to averting a future debt crisis.
- Sectoral Policy Initiatives
- The 24-Hour Economy policy could boost productivity and employment but requires a clear implementation framework and stakeholder engagement.
- The proposed Women’s Development Bank lacks the necessary capital base for sustainability. CERPA suggests leveraging existing financial institutions to support women entrepreneurs instead.
- The Agriculture for Economic Transformation Agenda (AETA) must ensure market access and financing to prevent post-harvest losses and sustain growth in the sector.
- The $10 Billion “Big Push” Infrastructure Plan requires transparent funding mechanisms and public-private partnerships to prevent abandoned projects and cost overruns.
- Concerns Over Budget Transparency
- CERPA’s analysis identified inconsistencies between figures quoted in the Finance Minister’s speech, the main budget document, and appendices, notably the 2025 GDP growth target (4.0% vs. 4.4%).
- Such discrepancies raise concerns about the reliability of budgetary data and require immediate rectification for greater fiscal transparency.
Recommendations for Sustainable Economic Growth CERPA calls on the government to prioritize:
- Strengthening revenue mobilization without overburdening businesses and households.
- Enhancing transparency and accountability in public financial management.
- Investing in productive sectors, including agriculture, industrialization, and digital transformation.
- Addressing inflation and currency depreciation through sound macroeconomic policies.
