The 2025 Budget Statement presents a comprehensive economic agenda aimed at addressing Ghana’s significant challenges, including high public debt and fiscal risks in key sectors. The budget seeks to implement strategic reforms while setting realistic growth targets for a sustainable future. Key initiatives include the Big Push Infrastructure Programme, focused on enhancing infrastructure and stimulating economic growth through careful fiscal management.
The 2025 Budget Statement outlines an ambitious economic agenda designed to reset Ghana’s economy following significant challenges inherited from previous governance. The country faces multiple economic hurdles, including a high public debt, fiscal risks in vital sectors like energy and cocoa, and deficiencies in public financial management. This budget aims to tackle these issues through strategic reforms, steering Ghana towards sustainable and inclusive growth.
The statement begins with an acknowledgement of the economic realities Ghana is grappling with, particularly the escalated public debt that reached alarming levels in 2022. The government’s inability to access international capital markets has intensified the situation, compelling it to initiate a debt exchange program and seek liquidity support from the International Monetary Fund (IMF). Ghana’s concerning debt position coincides with broader challenges faced by developing nations; however, the debt obligations for 2025-2028, including GHS150.3 billion in domestic debt and US$8.7 billion in external debt, render its situation particularly precarious.
To navigate these economic challenges, the government has proposed several corrective measures such as operationalising a sinking fund, restructuring existing debts, and cautiously reopening the domestic bond market. These initiatives are essential in alleviating liquidity pressures stemming from significant short-term treasury bill obligations, which are projected to total GH¢111.1 billion in 2025.
The budget further addresses substantial fiscal risks within the energy and cocoa sectors, pivotal to Ghana’s economic framework. The energy sector’s legacy debt of US$1.73 billion owed to Independent Power Producers (IPPs) compounded with a 2025 financing gap estimated at GH¢35 billion underscores the urgent need for reform. In the cocoa sector, production has plummeted by nearly 50% over the last three years due to contractual defaults and operational challenges, further straining the national budget.
In response, the government has vowed to renegotiate IPP contracts to mitigate capacity charges, enhance revenue collection through private sector involvement, and revise cocoa farmgate prices to deter smuggling. These strategies are crucial in alleviating financial pressure on the national budget stemming from these sectors.
A distinctive aspect of the 2025 Budget is the establishment of realistic growth targets. Following a GDP growth rate of 5.7% in 2024, which was significantly influenced by illegal mining activities, the government has opted for more conservative projections of a 4.00% real GDP growth and a 4.80% non-oil GDP growth for 2025. This recalibration aligns with global economic trends, reflecting the need for a stable and sustainable economic model amid rising inflation and uncertainties.
The emphasis on revenue mobilisation is a central tenet of the government’s fiscal strategy, with proposed tax reforms such as refining the VAT system and discontinuing the COVID-19 levy. Additionally, the government intends to increase the Growth & Sustainability Levy from 1% to 3%. On the expenditure side, a focus on rationalising expenditures involves eliminating cost-intensive programs, thereby saving more than GH¢1.8 billion.
The government has also announced the uncapping of statutory funds, which will create over GH¢20 billion in fiscal space for priority programs, including significant initiatives like the Big Push Infrastructure Programme and the Agriculture for Economic Transformation (AETA). This move aims to bolster infrastructure development and agricultural progress, both critical for long-term economic growth.
Among the noteworthy initiatives outlined in the budget is the Big Push Infrastructure Programme, which aspires to accelerate developmental projects focused on transport, energy, and technology. This game-changing initiative parallels similar efforts in other nations and aims to resolve infrastructure limitations that impede productivity. The Big Push is envisioned as a transformative strategy that will stimulate sustainable growth, generate employment, and enhance the living standards of Ghanaians.
In conclusion, the 2025 Budget exemplifies a strategic approach to Ghana’s economic plight, acknowledging existing constraints while fostering a vision for future recovery and growth. With conservative growth targets, fiscal prudence, and strategic revenue reforms, the budget reflects an understanding of the current economic landscape. The Big Push Infrastructure Programme emerges as a pivotal initiative positioned to transform Ghana’s economy, signaling the country’s commitment to infrastructural development as a means to propel economic transformation for sustained prosperity.
The 2025 Budget is a comprehensive and strategic framework designed to address Ghana’s pressing economic challenges. With an emphasis on fiscal discipline, realistic growth targets, and transformative initiatives such as the Big Push Infrastructure Programme, the budget reflects a proactive approach towards fostering sustainable growth. By prioritizing revenue mobilization and optimizing expenditures, Ghana aims to restore fiscal credibility and support inclusive progress, paving the way to a prosperous future for all its citizens.
Original Source: www.ghanaweb.com
