Editorial: Ahead of 2025 budget statement, Gov’t jaw-jaws with IMF

Government has commenced discussions with the International Monetary Fund (IMF) on the 2025 budget in a bid to consolidate gains made under the IMF-supported programme while addressing fiscal and economic challenges.

Led by Stephane Roudet, the IMF mission is assessing progress under its ongoing economic stabilisation programme that was initiated in response to persistent fiscal imbalances and external vulnerabilities.

Ghana’s fiscal deficit remains a central concern. It stood at 7.3 percent of Gross Domestic Product (GDP) in 2024, with government aiming to bring it within the IMF programme target of below 5 percent in 2025.

Inflation peaked at 54.1 percent in early 2023 but has since moderated to 23.5 percent as of January 2025, in part due to tighter monetary policies and exchange rate stabilisation efforts by the Bank of Ghana (BoG).

“The discussions will centre primarily on Ghana’s progress under the IMF-supported programme and policy direction of government in the 2025 budget,” the Ministry of Finance said in a statement.

Pledges to eliminate various revenue measures – such as the e-levy, Covid tax, emissions tax and betting tax – will require stronger revenue mobilisation efforts and tighter expenditure controls to compensate for the shortfall.

Projections indicate that removing these taxes will lead to a revenue loss of GH¢6.37billion in 2025, rising to GH¢7.37billion in 2026 and GH¢8.41billion in 2027.

A critical component of IMF discussions is the energy sector, which has been a persistent drain on public finances.

Energy sector debt, which stood at approximately US$2.1billion as of 2024, has been a major contributor to the country’s fiscal challenges – with unpaid subsidies and inefficiencies continuing to weigh on government’s balance sheet.

The IMF has previously emphasised a need for structural reforms in the energy sector, including cost-reflective tariffs and renegotiation of power purchase agreements.

With rising global energy prices and a weakening cedi – currently trading at  GH¢15.2 to the US dollar on the interbank rate – government faces difficult choices in balancing affordability with sustainability.

Analysts expect the 2025 budget to reflect a balance between fiscal consolidation and targetted investments to support growth in key sectors including agriculture, manufacturing and digital services.

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