By Alex Ababio
Finance Minister Dr. Cassiel Ato Forson is poised to present the 2025 Budget Statement and Economic Policy to Parliament today, marking the inaugural financial blueprint of President John Mahama’s administration since his return to office in January. This budget arrives at a pivotal moment as Ghana seeks to consolidate its recent economic gains and address persistent fiscal challenges.
Ghana’s economy has exhibited remarkable resilience over the past year. In the third quarter of 2024, the nation recorded a 7.2% GDP growth, a significant rebound from the 2.2% growth observed during the same period in 2023. This surge represents the highest quarterly growth since 2019, driven by robust performances in sectors such as Mining and Quarrying, Information and Communication, Crops, Construction, and Manufacturing.
The Industry sector led this growth with a 10.4% year-on-year increase, followed by Services at 6.4% and Agriculture at 3.2%. Notably, the non-oil GDP growth was even higher at 7.7%, underscoring the diversified nature of Ghana’s economic expansion.
Inflation and Monetary Policy
Inflation has been a persistent concern for Ghana. However, recent data indicates a positive trend, with consumer inflation decreasing for the second consecutive month in February 2025, falling to 23.1% from 23.5% in January. This decline is attributed to easing food and non-food price rises.
In response to the improving inflation outlook, the Bank of Ghana reduced its key interest rate by 200 basis points to 27% in September 2024. Governor Ernest Addison highlighted that this decision reflects the central bank’s satisfaction with the progress in economic indicators, including growth, inflation, and reserves.
Fiscal Challenges and Debt Management
Despite these positive indicators, Ghana continues to grapple with high debt levels. The country is currently engaged in negotiations to adjust parts of the $3 billion, three-year International Monetary Fund (IMF) program established in 2023 by the previous administration. President Mahama has initiated a national economic dialogue to explore changes to the IMF agreement, aiming to reverse economic stagnation while adhering to fiscal discipline measures.
In January 2025, Parliament passed a provisional budget of 68.1 billion Ghanaian cedis ($4.65 billion) to fund government operations through March, thereby averting a potential shutdown. This budget allocated nearly one-third of its funds to energy-sector service providers to address power supply challenges, reflecting the administration’s commitment to stabilizing critical infrastructure.
Physical Developments and Infrastructure Investments
The recent economic growth has translated into tangible physical developments across Ghana, particularly in infrastructure, healthcare, and job creation.
Road Infrastructure
In 2024, the government invested over GH₵10 billion in road infrastructure development. This substantial investment led to the construction, upgrading, and rehabilitation of numerous roads nationwide, enhancing connectivity and facilitating trade. The District Road Network Improvement Programme (DRIP) was a significant initiative under this investment, providing 2,240 units of earth-moving equipment to 261 Metropolitan, Municipal, and District Assemblies (MMDAs). This program not only improved road conditions but also created approximately 10,000 jobs for auto mechanics, operators, technicians, and drivers across the country.
Petroleum Hub Development
Ghana has embarked on constructing a $12 billion petroleum hub in Jomoro, aiming to establish itself as a key regional petroleum hub by 2036. The project includes a 300,000 barrel-per-day oil refinery and is expected to supply refined products and by-products for West Africa. Funded by a consortium comprising Touchstone Capital Group Holdings, UIC Energy Ghana, China Wuhan Engineering Co., and China Construction Third Engineering Bureau Co., this initiative is seen as significant for the nation’s development. However, the project has faced criticism and protests from affected local farmers, with concerns about its financial viability and impact on communities.
Healthcare Infrastructure
The economic growth has also facilitated investments in healthcare infrastructure. Several new hospitals and clinics have been constructed or upgraded, particularly in underserved regions, improving access to quality healthcare services. These developments have not only enhanced healthcare delivery but also created employment opportunities for healthcare professionals and support staff.
Job Creation and Youth Employment
The government’s focus on infrastructure development has significantly contributed to job creation, particularly for the youth. Projects like the DRIP and the petroleum hub have generated thousands of jobs in construction, engineering, and ancillary services. Additionally, initiatives such as the Planting for Food and Jobs Phase 2, SME Growth and Opportunity Program, and the One District, One Factory initiative have provided employment and entrepreneurship opportunities, fostering individual wealth creation and economic empowerment.
Anticipated Budgetary Measures
The 2025 budget is expected to introduce several significant policy shifts:
Tax Reforms: A key highlight is the anticipated removal of controversial taxes, including the Electronic Transfer Levy (E-Levy), the COVID-19 Health Levy, and the Betting Tax. These levies, introduced by the previous administration, faced widespread criticism for increasing the financial burden on citizens. The current government aims to fulfill its campaign promise to reduce the tax burden, thereby easing economic hardships and stimulating business growth.
Alternative Revenue Sources: To compensate for the loss of revenue from these tax cuts, the government is expected to outline alternative revenue streams. This may include enhancing tax compliance, broadening the tax base, and leveraging public-private partnerships to fund infrastructure projects.
Job Creation and Infrastructure Development: The budget is likely to prioritize initiatives aimed at job creation, particularly for the youth, and infrastructure development to support long-term economic growth. Programs such as the Planting for Food and Jobs Phase 2, SME Growth and Opportunity Program, and the One District, One Factory initiative are expected to receive significant attention.
Social Interventions:
The 2025 budget is expected to introduce targeted social interventions to improve the livelihoods of Ghanaians. Given the rising cost of living and disparities in wealth distribution, the government aims to cushion vulnerable populations through various programs.
Education Support: The Free Senior High School (Free SHS) policy will continue, with additional resources allocated to improve infrastructure, provide adequate learning materials, and expand access to technical and vocational training. The government is also expected to introduce new initiatives to support tertiary students, particularly in Science, Technology, Engineering, and Mathematics (STEM) fields.
Healthcare Initiatives: As part of efforts to improve healthcare delivery, the National Health Insurance Scheme (NHIS) will receive increased funding to enhance coverage and efficiency. Additionally, the government is expected to roll out a comprehensive maternal and child health support program to reduce maternal and infant mortality rates.
Affordable Housing: With urban populations expanding rapidly, the government is likely to allocate funds for the construction of affordable housing units for low- and middle-income earners. Partnerships with private sector developers will be crucial in making these projects sustainable.
Finance Minister Dr. Cassiel Ato Forson is poised to present the 2025 Budget Statement and Economic Policy to Parliament today, marking the inaugural financial blueprint of President John Mahama’s administration since his return to office in January. Development and Economic Growth: Are They Aligned?
While Ghana’s economic growth statistics paint a positive picture, the question remains: are these gains translating into real, tangible improvements in people’s lives?
Infrastructure Expansion: The massive investment in road networks, including the Pokuase Interchange, Tema Motorway expansion, and rural feeder roads, has significantly improved connectivity. However, some regions still suffer from poor road infrastructure, affecting transportation of goods and services.
Electricity and Energy Sector Improvements: The government has made strides in expanding rural electrification, with over 85% of Ghanaians now having access to electricity. The petroleum hub project is expected to enhance Ghana’s energy security, but concerns about its environmental and social impact remain.
Employment and Wages: Despite job creation efforts, unemployment remains a pressing issue. Ghana’s unemployment rate stood at 14.7% in 2024, with youth unemployment being particularly high. Critics argue that while the economy is growing, many jobs created are either informal or do not offer sufficient wages to support a decent standard of living.
Wealth Creation for Individuals: While some Ghanaians have benefited from entrepreneurship support programs, many still struggle with access to capital. High lending rates, currently around 27%, make it difficult for small businesses to thrive, limiting wealth creation at the individual level.
Expert Opinions
Economic analysts have expressed mixed reactions to Ghana’s economic trajectory.
Dr. Joe Abbey, Economist at the Centre for Policy Analysis, argues that while GDP growth is encouraging, “the government must focus on ensuring that economic expansion leads to job creation and higher incomes. Otherwise, growth will remain just numbers on paper.”
The World Bank’s Ghana Economic Update (2024) emphasized that structural reforms are necessary to sustain economic growth. The report recommends improving domestic revenue mobilization, cutting wasteful government spending, and increasing investment in productive sectors.
The IMF Country Report (2024) highlighted the importance of balancing debt management with development spending. “Ghana must ensure that infrastructure investments are financially viable and do not further strain public debt levels,” the report cautioned.
Outlook for 2025 and Beyond
As Dr. Ato Forson presents the 2025 budget, Ghanaians will be watching keenly to see whether the policies outlined will lead to real economic transformation. The government’s ability to manage debt, sustain infrastructure investments, and create jobs while maintaining fiscal discipline will be crucial in determining the success of its economic agenda.
In conclusion, Ghana’s economy is showing strong signs of recovery and growth, but the challenge lies in ensuring that these gains translate into meaningful improvements in the lives of citizens. The 2025 budget will be a critical test of the Mahama administration’s ability to balance economic stability with social and physical development.