Government officials have begun critical discussions with the International Monetary Fund on the 2025 budget as Ghana strives to consolidate progress made under its IMF-supported programme while grappling with persistent fiscal and economic challenges.
The talks, scheduled from February 10 to 14, are set to address sweeping reforms—from revamping revenue administration and restructuring the energy sector to rationalising public spending.
At the heart of the debate is Ghana’s fiscal performance. With a deficit of 7.3 percent of GDP in 2024, officials are keen to tighten the fiscal belt and bring the deficit below the IMF’s target of 5 percent. Encouragingly, inflation, which surged to 54.1 percent in early 2023, has moderated to 23.5 percent by January 2025, thanks in part to the Bank of Ghana’s tighter monetary policies and efforts to stabilise the exchange rate.
Revenue mobilisation remains a critical point of discussion. The current tax-to-GDP ratio of 13.1 percent lags behind the African average, prompting calls for urgent reform. The Finance Ministry confirmed that the upcoming talks will scrutinise how best to boost domestic revenue without undermining economic growth. Recent pledges to scrap measures like the e-levy, Covid tax, emissions tax, and betting tax, while politically popular, risk significant revenue losses—projections suggest a shortfall of GH¢6.37 billion in 2025 alone, escalating in the years that follow. In this light, the Ghana Revenue Authority is expected to unveil a series of initiatives, including enhanced digital taxation and improved collection systems, to shore up revenues.
Energy sector challenges also loom large. With public debt in the energy sector reaching roughly US$2.1 billion as of 2024, unpaid subsidies and inefficiencies are taking their toll. The IMF has long urged Ghana to adopt structural reforms, such as cost-reflective tariffs and renegotiated power purchase agreements. Rising global energy prices and a weakening cedi—currently trading at about GH¢15.2 per US dollar—compound the issue, forcing the government to balance the twin imperatives of affordability and fiscal sustainability.
Expenditure rationalisation is equally pressing. The 2024 budget deficit, which reached GH¢62.6 billion, highlights the delicate balancing act of maintaining essential public services while adhering to strict spending limits. The Bank of Ghana, maintaining a benchmark policy rate just under 30 percent since mid-2024, is poised to play a central role in discussions about monetary policy and exchange rate stability. Despite signs of easing inflation, the central bank remains cautious about loosening monetary policy too soon amid lingering global uncertainties.
Behind the technical details, there is a palpable sense of urgency. Analysts point out that Ghana’s efforts to blend fiscal consolidation with targeted investments in sectors like agriculture, manufacturing, and digital services will be crucial, especially with public debt hovering around 74.5 percent of GDP. The outcomes of these discussions are expected to have wide-ranging implications for debt sustainability, investor sentiment, and the country’s overall credit rating.
While the IMF’s presence in these meetings underscores the importance of adhering to international best practices, there is also a broader debate at play. Critics argue that fiscal tightening must not come at the expense of essential services or job creation, especially in a country still recovering from economic headwinds. In this light, the government’s commitment to ensuring that economic reforms bolster rather than hinder social welfare is a message that resonates with many observers.
As the talks progress, stakeholders from key institutions—including the Bank of Ghana, the Ghana Revenue Authority, and the Controller and Accountant-General’s Department—will be closely watching each development. The balancing act between fiscal discipline and sustainable growth continues to be a central theme, one that will ultimately shape Ghana’s economic trajectory in the coming years.
