2025 Budget faces Scrutiny over Credibility and Economic Growth Prospects

The 2025 Budget Statement and Economic Policy of Government, presented by Finance Minister Dr. Ato Forson, has come under intense scrutiny, with former Finance Minister Mohammed Amin Adam questioning its credibility and feasibility. Opening the debate on the budget, Dr. Amin highlighted inconsistencies in revenue projections and underfunding of key initiatives, warning that the budget fails to inspire confidence in Ghana’s economic future.

Dr. Amin argued that the budget’s projected 4% economic growth for 2025 is a reflection of a “reset economy” that has been mismanaged, citing a contrast with the previous 5.7% growth rate. More critically, he pointed out that government expenditure allocations to Ministries, Departments, and Agencies (MDAs) amount to GH₵22 billion, whereas the Appropriation Act provides only GH₵6.9 billion, leaving a funding gap of GH₵15 billion.

“How can the government fulfill its promises with such a shortfall?” he questioned, emphasizing that priority initiatives dependent on Goods and Services (G&S) are severely underfunded.

Investor Confidence and Fiscal Credibility at Stake

Dr. Amin also raised concerns over fiscal balances presented in the budget, noting discrepancies in Ghana’s deficit projections. He stated that the overall fiscal balance for 2024 is estimated at a deficit of 7.6% on a commitment basis, while the primary deficit for 2025 is projected at 3.6%. These figures, he suggested, fail to present a true picture of Ghana’s economic standing.

A key issue, according to Dr. Amin, is the government’s reliance on unaudited claims to determine fiscal balances—an approach that contradicts the requirements of the International Monetary Fund (IMF) program. The IMF, he revealed, has mandated a full audit of the GH₵49 billion used in calculating Ghana’s fiscal balances to ensure consistency.

“Even the Finance Minister admitted in paragraph 135 of the budget that he is yet to audit these outstanding claims. So how can we base our fiscal balances on unaudited figures?” he questioned.

Economic Repercussions Already Evident

Dr. Amin warned that Ghana is already facing negative consequences due to concerns over its fiscal credibility. He cited financial losses in the country’s sovereign bond market, with Ghana’s cost of borrowing rising to 700 basis points (bps) from 500 bps just three months ago.

He further referenced Bloomberg’s report on the day the budget was presented, which revealed that Ghana’s missed primary fiscal target led to a decline in international bond prices—Dollar bonds due in 2035 dropped by 1.8%, while 2029 notes fell by 1%.

“This shows a lack of confidence in the economy by international markets. How can we allow this to happen to ourselves?” he lamented.

Call for Budget Revisions

Concluding his argument, Dr. Amin declared that the 2025 budget is built on weak foundations and risks disappointing many Ghanaians, particularly the youth.

“This budget lacks credibility. It cannot stand the test of time, and if implemented in its current form, it will fail to deliver the economic relief that Ghanaians desperately need,” he stated.

With debates ongoing, the pressure is mounting on the government to address the concerns raised and restore investor confidence in Ghana’s economic trajectory.