2026  Budget statement and economic policy

…a retrospective on the historical antecedents

 By Constance Gbedzo

 The 2026 Budget Statement and Economic Policy, presented to Parliament, centers on a strategic shift from recovery to transformation, aiming to consolidate macroeconomic stability gains and leverage them to drive sustained economic development, job creation, and infrastructural modernization. The budget, which is anchored on the theme “Resetting for Growth, Jobs, and Economic Transformation” indicated that the leadership of the John Mahama administration has full understanding of the task they are confronted with.

In the recent past, the management of the Ghanaian economy has been very poor. We also have had years of lamentation about the foreign domination, over-reliance on imports and our inability to add value to our exports. Particularly, the period 2017 to 2024 has seen many quick fixes; the rushed introduction of the Free SHS Programme, and the sudden cancellation of road tolls without any credible alternative revenue source. We have set targets without detailed roadmaps defining required actions, their timing, and their effects as was the case with the E-levy, which failed to bring in the expected revenues. Also, Ghana will be boasting three international airports while our internal road network, hospitals and schools are very poor. The large increase in the number of ministries and appointees in 2017 was, invariably, a waste that did not make any impact. Political motivations leading to reckless increases in the size of the parliament of Ghana, with little or no thought about the extra costs – salaries, multiple ex-gratia payments, Common Fund allocations, etc., etc.  All these, combined with corruption, made historical budget shortfalls and excessive borrowing inevitable.

Therefore, the economy has suffered grave consequences of economic mismanagement. Ghanaians experienced life-threatening levels of galloping inflation, currency depreciation and frightening unemployment rate. Inflation in December 2022, stood at 40.4%, with 58.53% of cedi depreciation. There were signs of a nation in crisis everywhere you turned – unsustainable indebtedness and threats of default, deteriorating socio-economic infrastructure, turmoil in the markets, and growing joblessness among the youth.

Despite this, the Ghanaian people have displayed remarkable resilience and patience, using their democratic choices as a mechanism for correction. The electoral verdicts in 2024 delivered an “overwhelming victory” for the President, His Excellency, John Dramani Mahama, demonstrating a democratic coup d’état where citizens use the ballot box to disapprove of poor economic stewardship.

The 2025 Economic Policy and the budget presented government’s commitment to sustaining fiscal discipline, strengthening revenue mobilization, and ensuring responsible debt management to foster and protect the economic recovery in 2025. Indeed, the year 2025 was marked as a decisive turning point for Ghana’s economy, showing a significant recovery and restoration of macroeconomic stability in the following areas:

• GDP Growth: Real GDP growth expanded by a strong 3% in the first half of 2025, an increase from 5.1% in the same period of 2024. However, the World Bank projected an overall moderation to about 3.9-4.0% for the full year due to the impact of fiscal adjustments.
• Inflation and Cedi Stability: A notable achievement was the rapid decline in inflation, which fell from 23.8% at the end of 2024 to a single-digit of 0% by October 2025. The Ghana Cedi demonstrated exceptional resilience, appreciating by 42.6% against the US Dollar by the end of June 2025.
• Fiscal Position: Ghana’s fiscal position showed significant improvement, beating targets under the IMF program. The primary balance (on a commitment basis) posted a 1% of GDP surplus by June 2025, surpassing the ambitious 0.4% target.
• Credit Rating: Progress in fiscal consolidation, debt restructuring, and declining inflation led to an upgrade in Ghana’s sovereign credit rating, with Fitch Ratings upgrading the country’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B-‘ with a stable outlook in June 2025.

 

Nevertheless, a central focus of the 2025 budget was increasing domestic capital expenditure, primarily through the “Big Push” Infrastructure Program. The government planned to invest GH?13.9 billion in 2025 on priority infrastructure projects. The budget allocated GH?13.8 billion to the road segment of the “Big Push” initiative, which is a major part of the government’s job creation strategy, expecting to generate an estimated 490,000 jobs from the awarded road contracts. In order to guarantee funding, amendments were proposed to the Petroleum Revenue Management Act (PRMA) and the Mineral Income and Investment Fund (MIIF) Act to allocate more revenues from oil (ABFA) and mineral royalties (MIIF) directly to the Consolidated Fund specifically for infrastructure development.

Regarding commodities performance, Ghana’s key export commodities; gold and oil were crucial to the positive external sector performance and reserve accumulation in 2025. Gold: Favorable gold prices and a surge in small-scale gold exports contributed significantly. Shipments from small-scale miners reached 81.7 tonnes by October 2025, surpassing large-scale exports for the first time. The government targeted a total gold output of approximately 144.5mt in 2025. The Bank of Ghana (BoG) increased its gold reserves to 37.06 tonnes by September 2025, a 21.3% rise, under the Domestic Gold Purchase Programme (DGPP). Overall trade performance was robust, driven by strong gold and oil exports, and favorable terms of trade, which also included cocoa prices.

A key pillar of the 2025 economic plan was entrenching fiscal discipline, driven by the need for debt sustainability and reform. Ghanaian have generally supported Government’s Fiscal Disciplinary Measures. The budget included measures for rationalizing government expenditure and eliminating wasteful spending. Government spending growth slowed to 3.7%, providing evidence of increased fiscal discipline. A major drive was made to optimize domestic revenue mobilization through the broadening of the tax base, enhanced tax compliance measures, and modernization of tax administration using digital technology. Key tax measures proposed for 2025 included the following:

• Abolition of the 10% withholding tax on lottery winnings (Betting Tax).
• Abolition of the 1% Electronic Transfer Levy (E-levy).
• Abolition of the Emissions Levy on industries and vehicles.
• Re-introduction of road tolls through private sector partnership.
• An increase in the Growth and Sustainability Levy for mining companies from 1% to 3%.
• VAT reform, including abolishing the COVID-19 Levy and reversing the decoupling of the GETFund and NHIL from the VAT.
• Abolition of VAT on mineral exploration and reconnaissance activities to attract investment.
• Public Financial Management (PFM): The following reforms were introduced to tighten fiscal discipline, including; operationalization of a new fiscal compliance framework, full integration of the Ghana Electronic Procurement System (GHANEPS) with the Ghana Integrated Financial Management Information System (GIFMIS), and a payroll cleanup exercise using the Integrated Payroll and Personnel Database Phase II to eliminate “ghost names.”

Thus far, government is right to state that the administration met an economy in distress, weighed down by debt, weakened by mismanagement, and stripped of confidence. “Yet, through strong leadership, fiscal discipline, and policy consistency, the tide has turned.  President Mahama’s leadership has chosen a harder but higher road, the road of reform, renewal, and resilience. Ghana’s economy is now on a clear path of recovery, marked by renewed investor confidence and an improving macroeconomic outlook.”  Indeed, the 2025 Budget was the first act of courage, a declaration that Ghana was going rise again through discipline, reform, and purposeful leadership.

Many of us, “economic watchers” and researchers will agree that the managers of the economy “have restored fiscal discipline, brought inflation under control, stabilized the cedi, and rekindled investor confidence”. As stated by Dr. Cassiel Atto Forson, Ghana’s economy is breathing again, stronger, steadier, and full of promise. It is a revival forged amid the tempest of hopes harboured by the ordinary Ghanaian whose spirit has long been weathered by eight (8) years of hardship, impoverishment, and the shadows of deception.

It is the story of Ghanaians who endured hardship with dignity and held on to hope when the road was rough. Nonetheless, Ghanaians have collectively learned one truth, thus, fiscal discipline is the backbone of any economic progress. There cannot be a shortcut to responsible economic management. The clarion call, notwithstanding, is “never again must we allow recklessness, waste, and indiscipline to define how we handle the people’s money”.  As stated by His Excellency, President Mahama, “under his watch, the integrity of our public finances will remain sacred”.

 

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