UPSA-IERPP post-budget Dialogue: Focus on fiscal efficiency, not necessarily fiscal responsibility – Analysts tell govt

While panellists at the just-ended University of Professional Studies, Accra (UPSA), Institute of Economic Research and Public Policy (IERPP) post-budget dialogue 2025 agreed on the need to ensure debt sustainability, it was also made clear that the focus of the country should not entirely be on how much the country owes but on the ability to pay these debts.

According to the analysts, the focus of government should be on fiscal efficiency and not necessarily fiscal responsibility.

“It is therefore worrying that given the spate of government borrowing in the domestic market, the targeted debt-to-GDP threshold may not be achieved within the 2025 fiscal year,” a communique issued at the end of the dialogue held at UPSA campus on Friday, March 14. said.

Most especially, if these debts are accumulated to finance recurrent expenditure. In addition, if the government intends to abolish E-Levy in the 2025 fiscal year, how does it intend to make up for the over GHS500 million projected revenue in the budget presented to parliament?

“Answers from the minister of finance would be critical in ensuring we do not derail our debt trajectory achieved after a painful debt restructuring,” the communique said.

Energy reforms were also a focal point during the dialogue.

During the dialogue, experts highlighted the need for stable energy generation and distribution to power Ghana’s economy, with a focus on renewable energy investments and energy transmission infrastructure improvements.

Energy sector debt was a focal point of discussion.

Panelists pointed out that a World Bank study on the energy sector in 2017, showed an energy sector debt of about $2.4 million. It was projected that by 2023, the energy sector debt was going to increase from $2.4 million to $12.5 million if bold initiatives were not taken.

“This requires the urgent attention of the government to tackle challenges in the energy sector right from the generation stage to the transmission, distribution and collection, to avoid significant losses of money,” a communique issued at the end of the dialogue said.

The issue of debt Management and Fiscal Sustainability also featured strongly during the dialogue.

Several key policy recommendations have been identified to shape future fiscal decisions and economic policies, ensuring sustainable growth and stability for Ghana.

These recommendations address critical challenges highlighted during the dialogue, with a strong emphasis on economic resilience, sectoral development, and public welfare.

Strengthening Debt Management Frameworks:

To address the growing concerns over Ghana’s public debt, it is essential to prioritize the establishment of a more comprehensive debt management framework. This should involve: A clear strategy for reducing external and domestic debt burdens without stifling investment in critical infrastructure.

Transparent and accountable borrowing mechanisms that prioritize concessional loans and diversify funding sources to reduce the risk of debt distress. Improved coordination between the Ministry of Finance and other key stakeholders in managing debt to ensure fiscal discipline and future sustainability.

Financial Sector Reforms for Business Growth:

The financial sector’s role in driving economic growth cannot be overstated. To revitalize and strengthen Ghana’s financial system,

“We recommend Continued efforts to modernize the banking sector, with a particular focus on improving access to credit for small and medium-sized enterprises (SMEs), which are critical drivers of job creation. Streamlining regulatory frameworks to ensure that the financial sector remains robust, resilient, and competitive in a rapidly changing global economy. Policies to improve financial inclusion, especially in rural areas, by encouraging fintech solutions and expanding access to digital financial services.”

Below is the full communique…

March 19, 2025

MEDIA COMMUNIQUÉ

UPSA-IERPP Post-Budget Dialogue 2025: Implications For Economic Stability And Growth

March 14, 2025 | University of Professional Studies, Accra (UPSA)

 

The Faculty of Accounting and Finance (FAF) at the University of Professional Studies, Accra (UPSA), in collaboration with the Institute of Economic Research and Public Policy (IERPP), successfully hosted the UPSA-IERPP Post-Budget Dialogue 2025 on March 14, 2025, at the UPSA West Wing Auditorium.

 

This high-profile event served as a critical platform for analyzing the 2025 Budget Statement and Economic Policy presented by the Finance Minister Dr Ato Forson on March 11, 2025. It brought together key stakeholders—including policymakers, industry leaders, academics, and students—to assess the budget’s implications for Ghana’s economic growth and stability. This event served as a space for informing future fiscal policies and enhancing public understanding of the 2025 Budget’s impact on various sectors of the economy.

 

Key Highlights of the Post-Budget Dialogue:

 

1. High Attendance & Engagement: Over 250 participants attended, with additional seating arrangements made due to overwhelming interest.

 

1. Expert-Led Discussions: Thought-provoking panel discussions on financial sector reforms, energy policies, industrial growth, trade competitiveness, and economic transformation was presented.

 

1. Extensive Media Coverage: The event was covered by Metro TV, UTV, Wontumi Radio/TV, Net 2 TV, Asempa FM, Business & Financial Times (BnFT) and streamed live on UPSA’s digital platforms.

Key Insights from the Dialogue:

1. Privatization of State-Owned Enterprises (SOEs): While privatization may help improve efficiency, concerns over public backlash, transparency, and job losses remain. Panelists emphasized SOE reforms and Public-Private Partnerships (PPPs) as alternative strategies to resuscitating struggling SOEs.

 

1. Energy Sector Development: Experts highlighted the need for stable energy generation and distribution to power Ghana’s economy, with a focus on renewable energy investments and energy transmission infrastructure improvements. Energy sector debt was a focal point of discussion. Panelists pointed out that a World bank study on the energy sector in 2017, showed an energy sector debt of about $2.4 million. It was projected that by 2023, the energy sector debt was going to increase from $2.4 million to $12.5 million if bold initiatives were not taken. This require the urgent attention of government to tackle challenges in the energy sector right from the generation stage to the transmission, distribution and collection, to avoid significant losses of money.

 

1. Agricultural Sector & Job Creation: While Panelists agreed that a shift to agro-processing is a step in the right direction, concerns were raised over the reduction in budget allocation, from GHS2.395 billion in 2024 to GHS1.576 billion in 2025, representing about 34.2% decrease in budget allocation to the agriculture sector despite its role in food security, job creation, and industrialization.

 

1. Education & Human Capital Development: Panelists acknowledged the about 12% increase in budget allocation to the education ministry in 2025. The mention to cater for the tuition fees of Persons with Disability in tertiary institutions is also commendable. Nevertheless, calls were made for increased funding for education infrastructure, teacher welfare, and vocational training to align skills development with labor market demands. In particular, the lack of focus on STEM education is worrying if Ghana wants to be a player in the Fourth Industrial Revolution (4IR).

 

1. Debt Management & Fiscal Sustainability: While Panelists agreed the need to ensure debt sustainability, it was also made clear that the focus of the country should not entirely be about how much we owe but our ability to pay these debt. The focus of government should be on fiscal efficiency and not necessarily fiscal responsibility. It is therefore worrying that given the spate of government borrowing in the domestic market, targeted debt-to-GDP threshold may not be achieved within the 2025 fiscal year. Most especially, if these debts are accumulated to finance recurrent expenditure. In addition, if the government intend to abolish E-Levy in the 2025 fiscal year, how does it intend to make up for the over GHS500 million projected revenue in the budget presented to parliament? Answers from the minister of finance would be critical in ensuring we do not derail our debt trajectory achieved after a painful debt restructuring.

 

Policy Recommendations:

Based on the discussions at the Post-Budget Dialogue 2025, several key policy recommendations have been identified to shape future fiscal decisions and economic policies, ensuring sustainable growth and stability for Ghana. These recommendations address critical challenges highlighted during the dialogue, with a strong emphasis on economic resilience, sectoral development, and public welfare.

1. Strengthening Debt Management Frameworks: To address the growing concerns over Ghana’s public debt, it is essential to prioritize the establishment of a more comprehensive debt management framework. This should involve:

1. • A clear strategy for reducing external and domestic debt burdens without stifling investment in critical infrastructure.
   • Transparent and accountable borrowing mechanisms that prioritize concessional loans and diversify funding sources to reduce the risk of debt distress.
   • Improved coordination between the Ministry of Finance and other key stakeholders in managing debt to ensure fiscal discipline and future sustainability.

1. Financial Sector Reforms for Business Growth: The financial sector’s role in driving economic growth cannot be overstated. To revitalize and strengthen Ghana’s financial system, we recommend:

• Continued efforts to modernize the banking sector, with a particular focus on improving access to credit for small and medium-sized enterprises (SMEs), which are critical drivers of job creation.
• Streamlining regulatory frameworks to ensure that the financial sector remains robust, resilient, and competitive in a rapidly changing global economy.
• Policies to improve financial inclusion, especially in rural areas, by encouraging fintech solutions and expanding access to digital financial services.

 

1. Energy Policy Reforms for Sustainable Growth: Energy reforms were a focal point of the dialogue. The following policy actions are crucial for ensuring a sustainable energy future:

1. • Increased investment in renewable energy sources such as solar and wind, with clear incentives for both public and private sector participation.
   • Improving the efficiency of the existing energy infrastructure, reducing losses, and expanding access to affordable energy to support industrialization, especially in rural and underserved areas.
   • Fostering public-private partnerships to attract investment into the energy sector, ensuring that energy reforms align with Ghana’s long-term growth and sustainability goals.

1. Promoting Industrial Growth and Diversification: Industrialization remains a key pillar of Ghana’s economic growth strategy. To further promote industrial development, we recommend:

1. • Strengthening policies that support the development of industrial clusters, with a focus on leveraging local raw materials to reduce dependence on imports.
   • Implementing targeted tax incentives for businesses investing in high-value-added industries, such as technology, manufacturing, and agro-processing.
   • Developing a national strategy for industrial diversification that includes building the capacity of small industries by providing tax breaks and incentives, and creating jobs across sectors of the economy.

1. Agricultural Transformation for Economic Diversification: Agriculture remains a cornerstone of the Ghanaian economy, and its potential to drive economic diversification should be harnessed. Key recommendations include:

1. • Implementing policies that promote the modernization of agriculture through access to technology, sustainable practices, and investment in agro-processing industries.
   • Strengthening support for agribusinesses through improved access to finance, training, and market linkages to boost productivity and competitiveness in global markets.
   • Encouraging investment in irrigation and water management systems to reduce dependence on rain-fed agriculture and ensure food security.

1. Fostering Education and Skills Development for Economic Competitiveness: A strong, skilled workforce is essential for sustained economic growth. To address this, we recommend:

1. • Increasing investment in vocational training and technical education to equip the youth with the skills needed to thrive in emerging industries, particularly in the technology, energy, and manufacturing sectors.
   • Aligning educational curricula with the needs of the labor market to ensure graduates are equipped with relevant skills that meet industry demands.
   • Promoting private sector partnerships with educational institutions to bridge the skills gap and foster innovation and entrepreneurship.

1. Enhancing Taxation Systems and Revenue Mobilization: A robust taxation system is essential for financing economic development. We recommend:

1. • Reforming the tax system to ensure it is more inclusive, efficient, and equitable, with a focus on broadening the tax base and reducing informal sector tax evasion.
   • Incentivizing the informal sector is the only surest way to attract the sector into the tax net. Measures such as credit scoring would be vital in achieving this.
   • Enhancing capacity for tax collection through the digitalization of revenue systems, improving taxpayer education, and reducing administrative inefficiencies.
   • Exploring innovative revenue generation methods, such as the introduction of green taxes and encouraging corporate social responsibility investments by businesses.

1. Promoting Public-Private Partnerships (PPP): Given the immense infrastructure and development needs of the country, PPPs are critical. Key policy recommendations include:

1. • Expanding and incentivizing PPPs, particularly in the infrastructure, energy, and education sectors, to accelerate development.
   • Establishing a more predictable regulatory framework for PPPs that ensures transparent processes, reduces risks, and attracts both local and international investors.
   • Strengthening public sector capacity to manage and oversee PPP agreements effectively.

 

 

Professor Isaac Boadi                                                          Dr Frank Bannor

Dean, Faculty of Accounting and Finance, UPSA            Director of Public Policy, IERPP

(0559919595)                                                                       (0246416382)

Source: 3news.com