2025 Budget: A Bold Path to Economic Reset and Sustainable Growth…

The 2025 Budget Statement introduces an ambitious economic agenda to reset Ghana’s economy amidst significant challenges. Key issues include high public debt, fiscal risks in the energy and cocoa sectors, and weaknesses in financial management. The budget outlines strategic reforms aimed at achieving sustainable and inclusive growth, with a notable focus on realistic growth targets and infrastructure development through the Big Push initiative.

The 2025 Budget Statement outlines a comprehensive economic agenda designed to reset Ghana’s economy in light of challenges left by the previous administration. It aims to tackle high public debt, fiscal risks in vital sectors like energy and cocoa, and weaknesses in public financial management. This budget presents strategic reforms to steer Ghana towards a sustainable and inclusive growth future.

Acknowledging the existing economic challenges, the 2025 Budget highlights the high public debt that peaked in 2022, primarily due to lost access to international capital markets. Consequently, Ghana was compelled to initiate a debt exchange program and seek liquidity support from the IMF. The country faces significant debt servicing obligations totaling GHS150.3 billion in domestic debt and US$8.7 billion in external debt between 2025 and 2028. Measures such as operationalizing a sinking fund and restructuring debt are essential for mitigating liquidity pressures.

The budget emphasizes fiscal risks within both the energy and cocoa sectors, crucial to Ghana’s economy. The energy sector carries a legacy debt of approximately US$1.73 billion owed to Independent Power Producers (IPPs). Furthermore, a financing gap of GH¢35 billion is anticipated for 2025. Conversely, the cocoa sector is experiencing a decline in production of nearly 50% over three years, exacerbated by production challenges and contractual defaults. Addressing these issues requires renegotiating IPP contracts and improving revenue collection.

Setting realistic growth targets is pivotal in the 2025 Budget. Following a GDP growth of 5.7% in 2024, the government has revised expectations to 4.00% real GDP growth and 4.80% in non-oil GDP for 2025, recognizing the structural challenges. The adjustments align with global trends, where economies are recalibrating growth amidst inflationary pressures. This careful approach reflects a mature understanding of current economic conditions.

Revenue mobilization remains central to the fiscal strategy outlined in the 2025 Budget. Tax reforms include streamlining the VAT system and increasing the Growth & Sustainability Levy from 1% to 3%, alongside abolishing the COVID-19 levy. To enhance fiscal discipline, the government has opted for expenditure rationalization and eliminated programs such as Ghana CARES and One District, One Factory, yielding savings of over GH¢1.8 billion. This strategy is imperative for funding high-impact areas promoting long-term growth.

The Big Push Infrastructure Programme emerges as a transformative initiative aimed at propelling Ghana’s infrastructure development, focusing on strategic investments in transport, energy, and technology. Drawing parallels to the Levelling Up initiative in the UK, Ghana’s program seeks to address regional inequalities and boost economic growth. This initiative is expected to generate jobs and elevate living standards while supporting agricultural modernization through the Agriculture for Economic Transformation (AETA) program.

In conclusion, the 2025 Budget presents a bold and strategic response to Ghana’s economic troubles. It is rooted in realism, setting modest growth targets while emphasizing fiscal discipline and revenue reforms. The introduction of the Big Push Infrastructure Programme signifies the government’s commitment to advancing infrastructure crucial for economic growth. Overall, this budget functions as a framework to restore fiscal credibility and promote inclusive growth, fostering a prosperous future for all citizens.

The 2025 Budget is a meticulously crafted response to the multifaceted economic challenges facing Ghana. Its focus on fiscal discipline, realistic growth targets, and strategic reforms provides a roadmap for recovery and future sustainability. The emphasis on infrastructure development through the Big Push program will be vital in transforming the economy and enhancing growth. Ultimately, this budget represents a comprehensive effort to ensure long-term prosperity for all Ghanaians.

Original Source: www.ghanaweb.com