The 2025 Budget Statement presents an ambitious and forward-looking economic agenda aimed at resetting Ghana’s economy in the wake of the significant challenges inherited from the previous administration. The country is confronting a series of economic obstacles, including a high public debt burden, fiscal risks in critical sectors like energy and cocoa, and weaknesses in public financial management. This budget seeks to address these pressing issues through strategic reforms, placing Ghana on a more sustainable and inclusive growth trajectory.
Key Economic Challenges and the Path Forward
The 2025 Budget Statement begins by acknowledging the inherited economic realities, particularly the high public debt that peaked in 2022. This was exacerbated by Ghana’s lost access to the international capital markets, compelling the government to enter into a debt exchange program and secure liquidity support from the IMF. The challenges facing Ghana are not unique — many countries in the developing world have similarly grappled with unsustainable debt loads. However, Ghana’s situation is particularly precarious, with debt servicing obligations in the coming years set to total GHS150.3 billion for domestic debt and a staggering US$8.7 billion in external debt over the period 2025-2028.
To manage these challenges, the government has laid out a series of measures that include operationalising the sinking fund, restructuring debt, and cautiously reopening the domestic bond market. These steps are critical for easing the liquidity pressure caused by high short-term treasury bill obligations, which total GHS111.1 billion in 2025.
Energy and Cocoa Sectors: Addressing Fiscal Risks
The budget also highlights significant fiscal risks in the energy and cocoa sectors, both of which are pivotal to Ghana’s economy. The energy sector is burdened by a legacy debt of approximately US$1.73 billion owed to Independent Power Producers (IPPs) and a 2025 financing gap projected at GHS35 billion. Similarly, the cocoa sector is facing a sharp decline in production, with output falling by nearly 50% over the past three years. This, combined with contractual defaults and production challenges, is exacerbating fiscal pressures.
To tackle these challenges, the government has committed to renegotiating IPP contracts to reduce capacity charges, improving revenue collection through private sector participation, and adjusting cocoa farmgate prices to reduce smuggling. These measures are crucial in reducing the fiscal burden these sectors impose on the national budget.
Realistic and Strategic Growth Targets for 2025
A key feature of the 2025 Budget is its recognition of the need to set realistic growth targets. While Ghana achieved 5.7% GDP growth in 2024, much of this growth was driven by increased gold production, some of which was linked to illegal mining (Galamsey) and smuggling. This caused a significant loss of US$5 billion in potential revenue. In 2025, the government has set more modest targets, with real GDP growth projected at 4.00% and non-oil GDP growth at 4.80%. These figures represent a calculated adjustment to account for the country’s structural challenges and the need for a more sustainable economic model. The reduction in growth targets is in line with global economic trends, where even advanced economies are recalibrating growth expectations amidst inflationary pressures and global uncertainties.
Revenue Mobilisation and Expenditure Rationalisation
The 2025 Budget emphasises revenue mobilization as a central pillar of the government’s fiscal strategy. Several tax reforms are planned, including streamlining the VAT system and abolishing the COVID-19 levy. Additionally, the government plans to increase the Growth & Sustainability Levy from 1% to 3%. On the expenditure side, the government is adopting an approach of expenditure rationalisation. Key programs such as the Ghana CARES (Obaatanpa), YouStart, and One District, One Factory (1D1F) are being eliminated, saving the government over GHS1.8 billion. This focus on cutting wasteful spending is a crucial step towards improving fiscal discipline and ensuring that funds are allocated to high-impact areas that support long-term growth.
The government’s decision to uncap statutory funds is also noteworthy, as it will release over GHS20 billion in fiscal space for priority programs, including key initiatives like the Big Push Infrastructure Programme and the Agriculture for Economic Transformation (AETA) program. This uncapping is designed to support Ghana’s infrastructure development and agricultural transformation, sectors that have long been underfunded but are vital to the country’s economic future.
The Big Push
A Game-Changing Initiative
Among the most significant initiatives in the 2025 Budget is the Big Push Infrastructure Programme, which aims to accelerate the country’s infrastructure development. This initiative stands out as a game-changer for Ghana, with a focus on strategic investments in transport, energy, and technology. Similar programs, such as the Levelling Up initiative in the United Kingdom, have aimed to address regional inequalities and boost economic growth through targeted infrastructure investments. Ghana’s Big Push seeks to unlock similar potential by addressing infrastructure bottlenecks that have hindered productivity and economic development.
The Big Push is positioned as a transformative initiative that will drive sustainable economic growth, create jobs, and improve the living standards of ordinary Ghanaians. It also complements the government’s focus on agriculture, with the AETA program supporting economic transformation through agricultural modernisation, job creation, and export diversification. This holistic approach sets Ghana on a path to a more diversified and resilient economy.
Conclusion:A Strong and Strategic Budget
In conclusion, the 2025 Budget is a bold and well-thought-out response to Ghana’s economic challenges. It is a budget grounded in realism, acknowledging the country’s economic constraints while charting a course for recovery and long-term growth. The decision to set more conservative growth targets for 2025, alongside a focus on fiscal discipline, expenditure rationalisation, and strategic revenue reforms, reflects a mature understanding of Ghana’s current economic landscape.
The Big Push Infrastructure Programme is a particularly exciting and ambitious initiative that positions Ghana as a forward-thinking country that understands the importance of infrastructure in driving economic transformation.
This budget is more than just a set of financial allocations; it is a roadmap to restore fiscal credibility, support vulnerable sectors, and drive inclusive growth. It is an excellent, reform-driven blueprint for transforming Ghana’s economy and ensuring a prosperous future for all its citizens. The reset development train is in steady locomotion.