Ghana stands at a critical economic crossroads as Finance Minister Cassiel Ato Forson prepares to deliver his maiden budget statement on March 11.
The recent visit by the International Monetary Fund’s delegation, led by Stéphane Roudet, has set the stage for what promises to be one of the most closely watched budget presentations in recent years.
The new administration under President John Mahama inherits an economy showing tentative signs of stabilisation, but the path ahead requires careful navigation between ambitious campaign promises and fiscal prudence.
The high-level meetings between the IMF delegation and newly inaugurated President John Mahama, the Finance Minister and Bank of Ghana Acting Governor Dr Johnson Asiama marked the first significant engagement between the fund and the new administration, establishing what appears to be a constructive foundation for future cooperation.
Dr Forson, during his vetting, gave an assurance that the government would not adjust tax rates upwards to generate enough revenue. He said his strategy for boosting revenue would focus on tax compliance.
The Graphic Business believes Dr Forson’s commitment to avoiding tax increases while improving revenue collection through enhanced compliance is commendable, but the devil will be in the details.
His target of raising Ghana’s tax-to-GDP ratio from 13% to 16% without increasing tax rates is ambitious.
While the pledge to remove certain taxes, including the betting tax and E-levy may provide welcome relief to citizens, the government must clearly articulate how it will offset these revenue losses, while maintaining fiscal discipline under the $3 billion IMF programme.
The inflation challenge looms large. Missing the 2024 target of 15%, with December inflation at 23.8% underscores the magnitude of Dr Forson’s pledge to achieve 8% inflation in the medium-term.
This commitment will require unprecedented coordination between fiscal and monetary policies, particularly in expenditure management and foreign exchange stability.
The energy sector presents another crucial challenge. The announcement of plans to explore privatisation options for the Electricity Company of Ghana signals a bold step toward addressing long-standing inefficiencies.
However, the success of this initiative will depend on careful implementation that balances operational improvement with social responsibility.
Social interventions, a cornerstone of the administration’s campaign promises, must be designed within the constraints of fiscal reality.
The government faces the delicate task of maintaining essential services while adhering to IMF programme requirements. This balance will be particularly critical in education and healthcare, where funding needs remain substantial.
As Ghana approaches its fourth IMF programme review in April 2025, the upcoming budget must demonstrate both vision and restraint.
The government’s ability to chart a course that promotes growth while maintaining fiscal discipline will be crucial for building investor confidence and ensuring long-term economic stability.
The early engagement between the new administration and the IMF appears constructive, but the real test lies ahead. Success will require not just careful policy design but also effective implementation and transparent communication with all stakeholders.
The 2025 budget must serve as more than just a financial blueprint – it needs to be a credible roadmap for Ghana’s economic transformation, while maintaining the delicate balance between ambition and fiscal responsibility.
