2025 Budget appeals to industry expectations — Experts

Economic and financial experts have backed the 2025 budget and economic policy as providing a blueprint and clear road map for macroeconomic stability and economic recovery.

They argued that the fiscal plan, which outlines key structural reforms and strategic investments, would go a long way to address the country’s economic challenges.

The experts include Banking Consultant, Dr Richmond Atuahene, CEO of the Association of Ghana Industries (AGI), Seth Twum Akwaboah, Associate Professor of Economics at the University of Ghana Business School, Professor Agyapomaa Gyeke-Dako, and Tax Partner at Deloitte Ghana, George Ampomah.

At the Deloitte Post Budget discussions, they said the budget's focus on fiscal consolidation, inflation management and strategic growth sectors was particularly promising elements that could help restore investor confidence. 

Minister of Finance Dr Cassiel Ato Forson, on behalf of the President, last week presented the new administration’s maiden budget which is expected to serve as the blueprint for the economic reset agenda.

The minister announced a raft of measures that sought to strike a balance between maintaining fiscal discipline, while ensuring an economic growth that benefits all.

True to the NDC’s campaign promises, the budget scrapped some taxes which it described as nuisance taxes. They included the e-levy, betting tax, emissions levy and withholding tax on unprocessed gold by small-scale miners.

To pluck the loophole, the government announced that it would reduce the current tax refund ceiling from 6% to 4% of total revenue.

This is expected to help the government save GH¢3.8 billion which is enough to offset the scrap of e-levy (GH¢1.9 billion) and the tax on net winnings (GH¢180 million).

Tone for macroeconomic stability 

Professor Agyapomaa Gyeke-Dako said the budget sets the tone for macroeconomic stability. 

She said with the country battling with fiscal challenges over the years, the expenditure measures outlined in the budget if implemented would help restore fiscal discipline.

Some of the measures include the government’s commitment to the full implementation of the Public Financial Management Act. 

In this regard, the government plans to enforce the sanctions regime, link contracting and public procurement to budgetary provisions in the Medium-Term Expenditure Framework and seek parliamentary approval for all multi-year commitments as required by law.

The government also intends to comply with procurement processes and link them to approved Budgets and also respect the limits of the appropriation approved by Parliament.

Prof. Gyeke-Dako said these measures, combined with the revenue measures, demonstrate a strong will toward macroeconomic stability.

Commenting on the macroeconomic targets, she said while some were ambitious, they were achievable.

She said the deficit target of 3.1% was bold, same as the inflation target of 11%.

“If we will achieve these then we have to implement all the measures outlined in the budget,” she stated.

Concerns of businesses

George Ampomah, for his part, said the budget addressed some of the promises made by the government, especially the scrapping of the taxes.

He said it appeared that the taxes that were scrapped mainly addressed the concerns of individuals, but was hopeful that the main concern of business, which was a review of the VAT system, would be addressed in due time.

Mr Ampomah said while the scrapping of the taxes was good, the government must quickly find sustainable ways to pluck the revenue loophole.

Reflection of challenges 

Seth Twum Akwaboah also added that the budget was a reflection of the challenges in the economy and also presented the government’s reset measures.

He said the key challenge of businesses was macroeconomic instability as it makes it difficult for them to plan, noting that the budget’s focus on restoring macroeconomic stability was commendable.

Mr Akwaboah also commended the government for scrapping some taxes which he said were not helpful to the business community.

He also emphasised that the main challenge of businesses with regard to taxes is the current VAT system, urging the government to speed up the reforms.

Debt overhang 

For his part, Dr Atuahene commended the government for providing extensive data on the government’s debt position and arrears.

He said subsequent budgets have failed to do so and the minister must therefore be commended for that.

The 2025 budget indicated that apart from the huge arrears and commitments, the country’s fiscal situation was further complicated by huge bullet debt service and constrained financing options.

Currently, the Government’s options to financing the budget are limited to only the treasury bill market following the debt restructuring programme.

The Minister highlighted that the Domestic Debt Exchange Programme had resulted in huge domestic debt service payments. 

Over the next four years, the country is expected to pay about GH¢150.3 billion, representing 11.6% of GDP in domestic debt service obligation alone, of which 73.3% is due in 2027 (GH¢57.6 billion) and 2028 (GH¢52.5 billion).

The minister described the debt service obligation for 2025 as equally burdensome with significant humps in February (GH¢9.9 billion), July (GH¢6.2 billion) and August (GH¢10.1 billion).

The  fiscal challenges are further compounded by the significant short-term treasury bill maturities which totals about GH¢111.1 billion, requiring rollover on a weekly basis, placing additional pressure on cash flow and liquidity requirements.

Beyond domestic maturities, Ghana faces significant external debt service obligations over the next four years totalling US$8.7 billion, representing 10.9% of GDP, with heavy concentration in 2027 and 2028.

Dr Atuahene said beyond highlighting these challenges, the government must find innovative ways to fix it.