The 2025 Budget outlines fiscal policy objectives, claiming to promote macroeconomic stability, expenditure rationalization, revenue optimization, debt reduction, and fiscal sustainability.
However, a deeper look at the actual budget figures and policies reveals severe contradictions, making these objectives more rhetorical than substantive. Below are a few examples of this disconnect;
Claim: “Rationalising government expenditure and eliminating wasteful expenditure.”
Reality:
The 2025 Budget contradicts this goal by significantly increasing total government spending.
o 2024 Expenditure: GHS 226 billion
o 2025 Expenditure: GHS 268.7 billion
o Appropriation for 2025: GHS 290.7 billion (higher than the GHS 250 billion in 2024)
* Sharp increase in the Office of Government Machinery (OGM) Budget:
o Compensation for OGM staff increased by 729% from GHS 326M in 2024 to GHS 2.7 billion.
o Total allocation for OGM increased by 221%, despite the claim that the government is “lean.”
o GHS 70 million allocated for a vague ‘Research Department’ under OGM, while only GHS 51.3 million is set aside for the Women’s Development Bank.
o SIGA (which oversees SOE reforms) is given just GHS 15 million, despite SOEs being a key area for waste reduction.
*Failure to Cut Bureaucratic Excess:
o The government claims to be running a lean administration with fewer ministries, but the data suggests otherwise. Is this as a result of the many Presidential Staffers employed or just 60 Ministers with a bigger appetite for the tax payers money?
o Wage and salary expenditures have risen significantly even though labour out of its goodwill and magnanimity accepted a paltry 10% increase in this year’s wage negotiations.
Contradiction: The budget increases spending rather than rationalizing it, proving that the government is not eliminating wasteful expenditure but rather expanding it.
2. Revenue Mobilization Efforts are Inadequate & Contradictory
Claim: “Optimising domestic revenue mobilisation through broadening the tax base, increased non-tax revenue collection, and enhanced tax compliance.”
Reality:
Minimal Increase in Tax-to-GDP Ratio:
o Previous administration achieved 15.9% tax-to-GDP with a total revenue of GHS 186 bn in 2024.
o This budget only targets 16.1%, amounting to GHS 224 bn, a marginal increase despite its purported tax reforms and increase in certain tax handles.
* Abolition of Key Taxes Without Viable Revenue Alternatives:
o E-Levy, Covid-19 levy and others have been removed, creating a revenue gap.
o The government claims reducing the tax refund amount from 6% to 4% will recover GHS 3.8bn, but the E-levy and the Covid-19 levy alone account for about GHS 5bn, leaving a gap of GHS 1.2bn.
o The extension of the Special Import Levy from 2025 to 2028 also raises concerns about its long-term economic impact.
o There is also an increase in the Growth and Stability Levy from 1% to 3%, and an extension of the sunset clause to 2028. If the government were sensitive to the data, it would have realized that this is one tax that businesses found difficult to pay. In 2024, despite domestic revenue targets being exceeded, returns from this tax fell far short of expectations (even at 1%). The feasibility of businesses handling a 3% levy is questionable.
o Furthermore, purporting to remove betting tax while increasing levies on businesses raises concerns about the government’s priorities.
Unrealistic Gold-Based Revenue Projections:
o Government is betting on GoldBod to stabilize the cedi, but the framework lacks historical success nor prospects.
o Meanwhile, a massive GHS 279M has been allocated to the GoldBod, whose CEO is already talking about procuring Excavators and other mining equipment for miners and other fanciful ventures.
o The Goldbod is another bureaucratic intervention that would end up undermining private enterprise in the industry and unnecessarily increase government expenditure.
Contradiction: The government claims to optimize revenue collection but removes revenue streams without clear and sustainable replacements.
3. GDP Growth and Debt-to-GDP Ratio Discrepancies
Claim: “Ensuring sustainable economic growth and managing debt prudently.”
Reality:
* Underwhelming GDP Growth Target Despite Economic Reset Narrative:
o The government projects 4% GDP growth for 2025.
o This is significantly lower than the 5.7% GDP growth achieved in 2024 when they claim the economy is in the Intensive Care Unit(ICU)
o If the economy were truly being “reset,” the GDP growth target should be higher, reflecting increased economic confidence.
* Debt-to-GDP:
o The government admits that the Debt-to-GDP ratio has reduced to 61.8% in 2024, down from 73% inherited in 2016.
o The government failed to acknowledge that the reduction is not only a result of debt restructuring but also the huge expansion in the economy to GHS 1.2 trillion of GDP as a result of the programs and policies put in place for the economy’s recovery.
o Reduction in Import cover despite the institution of a Goldbod to shore up our currency.
The import cover is expected to reduce from 4 months in 2024 to 3 months in 2025, raising further concerns about Ghana’s ability to manage external obligations.
Contradiction: The government presents a positive outlook on debt sustainability while increasing spending and failing to match GDP growth with stronger fiscal policies.
4. Contradictions in Banking Policy and Interest Payment Inconsistencies
Claim: “Ensuring financial sector stability and supporting economic growth.”
Reality:
Unexplained Financial Sector Bailout:
o The government plans to spend GHS 10.4 billion on another financial sector bailout, yet the banking sector is not in distress.
o Prior to the banking sector cleanup, consultants were engaged to estimate costs, but this time, no clear justification has been provided.
o Improvements have already been seen in asset ratios, private sector lending, and total asset profiles.
o This move could undermine investor confidence by falsely implying that the banking sector is struggling.
o As regards ADB the budget itself discloses that we had already given them about 1.86bn in bonds under the Ghana Financial Stability Fund in 2024 and NIB had already been given 1.6bn out of the 2.3bn needed for its recapitalization.
Contradictions in Banking Policy:
o The minimum capital requirement for banks is GHS 400 million, yet the government allocates only GHS 51 million for the Women’s Development Bank.
o This amount is insufficient to establish a viable bank, raising questions about whether the initiative is serious or purely political.
o Rather than creating gender-based banking structures, the government should strengthen existing SME financing mechanisms for both men and women.
Interest Payment Inconsistencies:
o Budget estimates interest payments at GHS 64.1 billion.
o However, this does not reflect expected savings from the Debt Exchange Program, particularly the external component, which saved $8.1 billion.
o Instead of declining, interest payments have increased, raising concerns about whether the benefits of debt restructuring are being misrepresented.
Contradiction: The government’s financial sector strategy appears incoherent—allocating funds for an unnecessary bailout while failing to align interest payments with debt restructuring gains.
5. Misallocation of Domestic Capital Expenditure
Claim: “Increasing the share of domestic capital expenditure to spur economic growth and job creation.”
Reality:
Abandonment of Key Infrastructure Projects:
o Agenda 111 hospitals project and the Accra-Tema Motorway reconstruction were both previously funded through oil revenue (ABFA & GIIF).
o The 2025 Budget does not allocate any funds to complete these projects, despite national complaints about unfinished infrastructure.
* Vague and Underfunded “Big Push” Program:
o $10 billion is projected for infrastructure, but only $800 million is allocated in the first year.
o Extrapolating over four years, only about $4 billion will be spent, falling far short of the $10 billion target.
o Instead of properly funding infrastructure, the government is reallocating resources from SME programs (Ghana Cares, YouStart, NEIP) to fund the Big Push, which lacks detailed execution plans.
Contradiction: Instead of increasing and properly allocating capital expenditure, the government is shifting funds from effective youth programs to an ill-defined initiative.
6. Weak Confidence-Building Measures
Claim: “Restoring confidence in Ghana’s economy.”
Reality:
Unrealistic Economic Growth Targets:
o 2025 GDP growth projection is only 4b %, despite claims of an economic “reset”.
o This is significantly lower than the 5.7% growth achieved in 2024, an election year.
o If the government truly believed in its policies, growth expectations should be much higher.
Banking Sector Bailout Undermines Confidence:
o The government plans to spend GHS 10.4 billion on a financial sector bailout despite improvements in bank asset ratios and private sector lending.
o This creates unnecessary panic and may hurt investor confidence.
Contradiction: Instead of boosting confidence, the budget introduces policies that could actually discourage investment and economic optimism.
Conclusion
The government’s own budgetary allocations expose the disconnect between rhetoric and reality. The lack of consistency, misallocation of funds, and unrealistic revenue projections threaten Ghana’s economic recovery. Instead of a true reset, this budget risks worsening economic instability.
Abena Osei-Asare (MP)
The writer served as Minister of State at the Finance Ministry in the Akufo-Addo administration
