Ghana’s 2025 budget, presented by Finance Minister Dr. Cassiel Ato Forson, emphasizes economic recovery, fiscal discipline, and job creation in response to severe economic challenges. Key initiatives include significant spending cuts, ambitious GDP growth targets, revised tax measures, and social protection programs aimed at improving living standards. The government plans to stabilize the cedi while promoting a 24-hour economy and substantial infrastructure investments.
On 2025, Ghana’s Finance Minister, Dr. Cassiel Ato Forson, presented the budget under the leadership of President John Mahama, highlighting a commitment to economic recovery, job creation, and maintaining fiscal discipline. The country is grappling with a significant economic crisis characterized by high debt levels, soaring inflation, and previous fiscal mismanagement. To address these issues, the government is focusing on debt restructuring, stabilizing the local currency, and reducing unnecessary expenditures while promoting growth-oriented policies, including a proposed 24-hour economy.
The current state of the economy reveals escalating inflation, which increased from 23.2% in 2023 to 23.8% in 2024, exceeding set targets. Public debt has surged to GH¢726.7 billion, representing 61.8% of gross domestic product (GDP). Additionally, the government is facing GH¢67.5 billion in arrears, with road contractors owed GH¢21 billion alone. The energy sector is experiencing significant shortfalls, which cost GH¢20.8 billion in 2024 and is projected to reach GH¢35 billion in 2025. Further compounding these challenges, the cocoa sector reports a production decline of 50%, with COCOBOD incurring GH¢32 billion in debt.
Fiscal measures in the budget include substantial reductions in governmental expenditures, cutting the number of ministries from 30 to 23 and decreasing the total ministerial positions from 88 to 60. The strategy for managing debt involves creating fiscal buffers and restructuring repayment schedules. In an effort to mitigate overspending, new mandates for commencement certificates will be introduced alongside the integration of procurement systems. Additionally, the budget proposes the elimination of redundant programs such as GhanaCARES, YouStart, and the One District One Factory initiative while reallocating roles of Development Authorities to District Assemblies.
To stabilize the currency exchange rate, the budget proposes the establishment of a Ghana Gold Board aimed at accumulating foreign exchange reserves. The macroeconomic targets set forth in the budget are ambitious, aiming for an overall real GDP growth of at least 4.0%, a non-oil GDP growth of 4.8%, an end-period inflation rate of 11.9%, and a primary balance surplus of 1.5% of GDP. It also targets gross international reserves to cover a minimum of three months’ worth of imports.
In terms of tax reforms, the budget abolishes several taxes, including the controversial E-Levy (1% mobile money tax) and the betting tax (10% on lottery winnings). Other abolished taxes include the emission levy on industries and vehicles, as well as VAT on motor vehicle insurance. New tax adjustments include an increased mining levy designed to benefit from gold price windfalls and the reintroduction of road tolls, now incorporating digital payment systems.
Key initiatives outlined in the budget promote the establishment of a 24-hour economy to encourage continuous business operations. The government plans to invest $10 billion in infrastructure projects through the Big Push initiative, targeting roads, markets, and health facilities. An educational initiative termed ‘No-Fees-Stress’ will provide free first-year tertiary education, alongside distributions of sanitary pads to schoolgirls and increased funding for the school feeding program. Additionally, a reduction in the tax refund ceiling from 6% to 4% is expected to save GH₵3.8 billion, counteracting revenue losses.
The budget allocates GH₵499.8 million for free first-year tertiary educational fees, GH₵292.4 million for sanitary pads, and GH₵9.93 billion for the National Health Insurance Scheme (NHIS), which includes free primary healthcare and MahamaCares. Allocations for the Livelihood Empowerment Against Poverty (LEAP) program, school feeding initiatives, and the Capitation Grant are also set to increase. The government will reintroduce technology-driven road tolls while enhancing non-tax revenue frameworks.
The 2025 budget presented by Dr. Cassiel Ato Forson aims to tackle Ghana’s significant economic challenges through strategic measures focused on fiscal discipline, investment in infrastructure, and social protection. The government acknowledges the need for structural reforms, including tax reforms and expenditure cuts, to restore economic stability and encourage growth. The ambitious targets for GDP growth, inflation control, and social initiatives reflect a commitment to improving the livelihoods of Ghanaians and addressing the economic crisis.
Original Source: techlabari.com
