Accra, Ghana – In a revealing 2025 Budget presentation, the Finance Minister delivered a stark warning about Ghana’s economic future. Citing persistent fiscal challenges inherited from past administrations, the minister outlined a series of distressing indicators that underscore the nation’s struggle with soaring debt, runaway inflation, and structural weaknesses.
Economic Turbulence and Fiscal Imbalance
The minister lamented that despite efforts under an IMF-supported programme, the economy continues to flounder. Key concerns include:
Rising Inflation: Prices accelerated from 23.2% in 2023 to 23.8% in 2024, far overshooting both the budget target of 15% and the IMF’s central target of 18%.
Widening Fiscal Deficit: The primary balance deteriorated significantly—from a slight deficit of 0.2% of GDP in 2023 to a sharp 3.9% deficit in 2024. This shortfall missed the intended surplus of 0.5% of GDP by a staggering 4.4 percentage points.
Missed Benchmarks: Several critical structural targets due by the end of 2024 are now expected to be missed, prompting discussions with the IMF under the Monetary Policy Consultation Clause.
Mounting Arrears and Outstanding Liabilities
The financial strain is compounded by a colossal GH¢67.5 billion in arrears owed to contractors and suppliers—equivalent to 5.2% of GDP. Highlights include:
Road Sector Debt: Alone, the road sector accounts for GH¢21 billion of the arrears.
Unsettled Payments: Verification by the Ministry of Finance revealed GH¢49.2 billion in unpaid Interim Payment Certificates and invoices, with an additional GH¢18.3 billion pending as Bank Transfer Advice at the Controller and Accountant-General’s Department.
These arrears do not include extra liabilities such as:
US$1.73 billion owed to Independent Power Producers (IPPs).
GH¢68 billion due from the Electricity Company of Ghana (ECG).
GH¢32 billion from the Ghana Cocoa Board (COCOBOD).
GH¢5.75 billion from the Road Fund.
Moreover, the Bank of Ghana is currently seeking a GH¢53 billion bailout to counter its negative equity.
Unapproved Spending and Policy Lapses
The minister also criticized the unchecked awarding of government contracts. By the end of 2024, MDAs had committed the government to projects worth GH¢194 billion (about 16.5% of GDP), with over GH¢100 billion allocated solely to road projects. Many of these contracts were awarded without proper authorization, lacking commencement certificates and budgetary provisions—a clear breach of the Public Financial Management Act, 2016 (Act 921).
Government Response and the Road Ahead
In response to the mounting arrears, the Finance Ministry has commissioned a comprehensive audit to ensure that all outstanding claims are thoroughly validated before any payments are made. The minister emphasized that stringent fiscal discipline and robust control systems are urgently needed to reverse the current trend of financial mismanagement.
Conclusion
The 2025 Budget presentation casts a long shadow over Ghana’s economic outlook, exposing deep-rooted fiscal imbalances, escalating debt, and systemic policy violations. As the government gears up to implement corrective reforms, close collaboration with the IMF remains crucial in steering the nation back toward fiscal stability and sustainable growth.
Source:Mybrytfmonline.com/Gumedzo Isaac Acheampong
