Finance Minister Dr. Cassiel Ato Forson presented the 2025 budget under President John Mahama’s new administration, emphasizing economic recovery, job creation, and fiscal discipline.
Why It Matters
Ghana faces a severe economic crisis with high debt, inflation, and fiscal mismanagement. The government’s strategy focuses on restructuring debt, stabilizing the cedi, and cutting wasteful spending while introducing pro-growth policies like a 24-hour economy.
Key Highlights:
State of the Economy
- Inflation rose from 23.2% in 2023 to 23.8% in 2024, surpassing targets.
- Public debt reached GH¢726.7 billion (61.8% of GDP).
- The government owes GH¢67.5 billion in arrears, with road contractors alone owed GH¢21 billion.
- Energy sector shortfalls cost GH¢20.8 billion in 2024, with projected deficits of GH¢35 billion in 2025.
- The cocoa sector is in crisis, with production dropping by 50% and COCOBOD facing GH¢32 billion in debt.
Fiscal Measures
- Government spending cuts: Ministries reduced from 30 to 23; total ministers from 88 to 60.
- Debt management: Plans to build fiscal buffers and smoothen repayment schedules.
- Mandating commencement certificates and integrating procurement systems (GHANEPS with GIFMIS) to curb overspending.
- Eliminating wasteful programs like GhanaCARES, YouStart, and One District One Factory, and reassigning Development Authorities’ roles to District Assemblies.
- Exchange rate stability: Establishing a Ghana Gold Board to accumulate forex reserves.
Macroeconomic Targets and Stabilization Measures
The budget sets ambitious targets for 2025:
- Overall real GDP growth of at least 4.0%.
- Non-oil real GDP growth of at least 4.8%.
- End-period inflation of 11.9%.
- Primary balance surplus of 1.5% of GDP.
- Gross International Reserves covering at least three months of imports.
Tax Reforms
Abolished
- E-Levy (1% mobile money tax)
- Betting tax (10% on lottery winnings)
- Emission levy on industries and vehicles
- VAT on motor vehicle insurance
New tax adjustments
- Increased mining levy to capture gold price windfalls
- Road tolls reintroduced using digital payments
Key Initiatives
- 24-hour economy: Encouraging round-the-clock business operations.
- Big Push infrastructure plan: $10 billion investment in roads, markets, and hospitals.
- Free first-year tertiary education under ‘No-Fees-Stress’ initiative.
- Free sanitary pads for schoolgirls and increased funding for school feeding.
- Reducing the tax refund ceiling from 6% to 4%, saving GH₵3.8 billion to offset revenue losses.
- Labour export program: Formalizing Ghanaian workers’ migration to secure jobs abroad.
- Social Protection: GH₵499.8 million for free first-year tertiary fees, GH₵292.4 million for sanitary pads, GH₵9.93 billion for NHIS (including free primary healthcare and MahamaCares), and increased allocations for LEAP, School Feeding, and Capitation Grant.
- Reintroducing technology-driven road tolls and strengthening non-tax revenue frameworks.
