The Minister for Finance, Dr Cassiel Ato Forson has revealed that the Central Bank – Bank of Ghana- is seeking a bailout of GHS53 billion to address its negative equity challenge.
He explained the significant financial difficulties faced by Ghana’s Central Bank and the urgent need for a substantial bailout to stabilise its operations.
“The BoG is also seeking an amount of GHS53 billion as a bailout to be able to address the negative equity challenge they face,” Dr. Forson stated whilst presenting the 2025 budget to parliament yesterday.
He also revealed that the total central government arrears amounted to GHS 67.5 billion as of December 2024, representing 5.2% of Ghana’s GDP. He noted that the road sector alone recorded arrears of GHS21 billion.
“At the end of December 2024, total central government arrears amounted to GHS67.5 billion, representing 5.2% of GDP, Mr. Speaker, with the road sector recording arrears of GHS21 billion,” Dr. Forson explained.
“The first day I assumed duty, my office was inundated with requests for payments from numerous Contractors and Suppliers. To ascertain the total arrears and outstanding payments for all Ministries, Departments and Agencies (MDAs), the Ministry of Finance (MoF) formally requested information on all arrears and outstanding claims from the MDAs on January 28, 2025,” he said.
Touching on stalled projects, the finance minister disclosed that government would require at least 12 years to complete all stalled projects across the country due to financial constraints and restrictions imposed under the ongoing debt restructuring program.
“Mr. Speaker, unfortunately, as a result of the debt restructuring of these stalled projects, working with the IMF would take a minimum of 12 years if we decide to go business as usual. We will be engaging in the coming days to resolve this challenge,” the minister stated.
This was revealed on Tuesday, March 11, 2025 during the presentation of the 2025 Budget Statement to Parliament, highlighting the severe economic challenges Ghana faces.
According to the minister, the delay stems from the IMF-supported debt restructuring program, which has placed a cap on annual loan disbursements for ongoing projects.
As a result, projects that were halted due to funding shortages will take over a decade to complete if the government continues under the current disbursement structure.
IMF Restrictions and the Funding Gap
Under the IMF debt restructuring plan, Ghana is limited to an annual disbursement ceiling of $250 million for all bilateral loans that have been restructured.
This constraint is significantly lower than the funding required to complete halted projects within a reasonable timeframe.
With the road sector alone accounting for GHS 100 billion ($8 billion) in outstanding commitments, the government faces a major infrastructure deficit that will require careful financial planning to resolve.
Debt and Fiscal Pressures
The minister painted a grim picture of Ghana’s financial position, citing GHS 67.5 billion ($5.4 billion) in arrears owed to contractors and suppliers across various ministries, departments, and agencies (MDAs).
The finance ministry’s validation process also revealed that new contracts worth at least GHS 194 billion ($15.6 billion) have been awarded—many of them without proper commencement certificates or authorization, in direct violation of the Public Financial Management Act (Act 921).
To manage the crisis, the government has commissioned an audit of outstanding payments to ensure value for money before making any disbursements.
Additionally, the finance minister pledged to engage the IMF and other stakeholders to explore alternative solutions for expediting the completion of stalled projects. The government is also seeking to streamline procurement processes, ensure that new contracts align with approved budgets, and strictly enforce spending limits to prevent further accumulation of arrears.
Scrapping of Taxes
The Finance minister also announced the abolition of several taxes, including the 10% withholding tax on betting, the 1% electronic transfer levy (e-levy), the emission levy, and the VAT on motor vehicle insurance policies.
Small-scale miners will also see relief with the removal of the 1.5% withholding tax on unprocessed gold.
Explaining the rationale behind these removals, the minister emphasised, “The removal of these taxes will ease the burden on households and improve their disposable incomes. In addition, it will support business growth and improve tax compliance.”
The government is set to reduce the tax refund ceiling from 6% to 4% which is expected to save the country 3.8 billion Ghana cedis, more than compensating for the revenue losses from the removed taxes.
Reintroduction of Road Tolls and Energy Sector Levies
While abolishing certain taxes, the government plans to reintroduce road tolls in a technology-driven format to finance road construction and maintenance.
He stated that the new toll system will be technology-driven to enhance efficiency, transparency, and revenue collection.
The move comes after road tolls were suspended in 2022, a decision that significantly reduced government earnings for road maintenance and development. Despite the suspension, demand for better roads and infrastructure has continued to rise, prompting the government to reconsider the policy.
In his presentation, Dr. Forson stressed that the reintroduction of tolls will be part of the “Big Push Programme,” a government initiative focused on large-scale infrastructure investment.
The new system will leverage digital payment solutions to eliminate cash transactions, reduce delays, and prevent revenue leakages.
Reforming the Extractive Sector
Highlighting Ghana’s underutilization of its natural resources, the government acknowledged that while natural resource rent accounts for 14% of GDP, revenue from the extractive sector only contributes 1.5% of GDP.
To address this gap, the Growth and Sustainability Levy on mining companies will be increased from 1% to 3%, ensuring the nation gains a fairer share of its mineral wealth.
VAT Reforms and IMF
A comprehensive Value Added Tax (VAT) reform is on the horizon, with the government seeking technical assistance from the International Monetary Fund (IMF).
Among the proposed measures are: Abolishing the COVID-19 Levy, Reversing the decoupling of GetFund and the National Health Insurance Levy from VAT and Reducing the effective VAT rate for households and businesses.
The Minister acknowledged the distortions in the current VAT regime, stating, “Our VAT regime has been distorted and rendered inefficient. It combines both VAT and sales tax principles with a flat rate, standard rate, and levies.”
Educational Reform
The Minister disclosed that an amount of GH¢499.8 million has been allocated for the No-Academic-Fee policy for all first-year students in public tertiary institutions under the ‘No-Fees-Stress’ initiative,” Dr. Forson stated.
The policy is expected to benefit thousands of students across the country, covering academic fees for their first year in public universities, polytechnics and other tertiary institutions. Education stakeholders have welcomed the move, describing it as a step towards making higher education more accessible.
The No-Fees-Stress initiative forms part of broader social intervention programs outlined in the 2025 budget, including Free Tertiary Education for Persons with Disabilities, Free Primary Healthcare, and the Ghana Medical Care Trust (MahamaCares).
Moreover, the government has reaffirmed its commitment to enhancing access to education by allocating GH¢3.5 billion to the Free Secondary Education Programme and expanding free tertiary education for Persons with Disabilities (PWDs).
He announced plans to uncap the Ghana Education Trust Fund (GETFund) to provide a sustainable source of financing for both free secondary education and free tertiary education for PWDs.
“The President is committed to ensuring that financial constraints do not hinder access to quality education. By uncapping the GETFund, we will make dedicated funds available to fully finance free secondary education and extend free tertiary education to PWDs,” Dr. Forson stated.
With this initiative, qualified PWD students pursuing tertiary education will no longer bear the financial burden of tuition fees, making higher education more accessible.Additionally, the government has earmarked GH¢564.6 million for the comprehensive provision of free curricula-based textbooks.
The allocation will cover:Four (4) sets of KG books and workbooks for approximately 8 million learners.Four (4) sets of primary textbooks for 800,000 learners.Nine (9) sets of JHS 3 textbooks for 540,000 learners.Also, the school feeding program budget has increased by 33%, raising per-child meal allocations.
Nursing and teacher training allowances have been allocated 203 million and 480 million Ghana cedis, respectively.
Health insurance allocation has increased from 728.8 million to 953.5 million Ghana cedis,” he revealed.
Free Sanitary Pads for Students
The Minister also revealed that government had allocated GH¢292.4 million to begin the distribution of free sanitary pads to female students in primary and secondary schools.
“We have allocated an amount of 292.4 million Ghana cedis to commence the distribution of free sanitary pads to female students in primary and secondary schools,” the minister stated.
For years, the high cost of sanitary pads has been a barrier for many girls, leading to school absenteeism and health risks.
Under the previous tax policy, sanitary pads were classified as “Miscellaneous Manufactured Articles” under the Harmonised System Code 9619001000, attracting multiple taxes, including a 20% import duty, 12.5% Value Added Tax (VAT), and other statutory levies.
This resulted in a 32.5% tax on imported sanitary products, pushing the price of a pack of pads to between GH¢20 and GH¢40.
Export of Workers
According to Dr. Forson, the Ghana Labour Export Programme aims to ensure that Ghanaian workers are protected through legal frameworks that safeguard their rights and welfare.
The phenomenon of irregular migration continues to be a significant concern in Ghana. Despite this, six out of ten Ghanaians have considered leaving the country due to economic challenges.
As a result, some Ghanaian migrants are often stranded or face fatalities in transit or destination countries while pursuing better opportunities.
But Finance Minister said the export programme will help prevent worker exploitation, a major concern for many Ghanaians who travel abroad for employment under informal or unregulated conditions.
He indicated that the initiative will have significant economic benefits, as remittances from Ghanaian workers abroad are expected to boost foreign exchange earnings and support the country’s economy.
Agriculture Sector
Dr. Cassiel Ato Forson, also announced the allocation of GH¢1.5 billion to the agricultural sector.This substantial investment, he said, is part of the Agriculture for Economic Transformation Agenda (AETA), which has been designed to drive economic growth, reduce poverty, and enhance food security.
Dr. Forson further highlighted key components that will benefit from the allocation.
“The Feed Ghana Programme, Ghana Grains Development Project, Vegetable Development Project and NkokorNketenkete are all projects aimed at improving agricultural productivity, reducing reliance on imported food items, improving vegetable production and creating employment opportunities in rural areas.
“By focusing on these strategic areas, government hopes to not only boost local food production, but also contribute to the overall economic transformation of Ghana,” he further noted.
The post BoG Seeking GH¢53bn Bailout From Government –Ato Forson Reveals appeared first on The Ghanaian Chronicle.
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