Finance Minister Dr. Cassiel Ato Forson has presented the 2025 Budget Statement and Economic Policy to Parliament, outlining key strategies aimed at stabilizing the economy. The 2025 budget highlights comprehensive measures to address exchange rate fluctuations, which have been a major concern for traders and businesses.
Dr. Forson stated revealed that the overriding concern among Ghanaian traders and businesses remains price and exchange rate stability. Apart from eroding their working capital, Dr. Forson mentioned that exchange rate volatility makes effective business planning impossible and increases the cost of doing business in the country.
“The 2025 budget proposes collaboration with the Bank of Ghana to implement policies that will effectively manage exchange rate inflation,” he said. He also mentioned that the government engaged Ghanaian youth in discussions regarding economic policies. These engagements he said, revealed critical concerns, including the delayed salaries of 321 pharmacists employed since June 2023.
Assuring the affected persons, he said, “We will take urgent steps to remedy this situation immediately.”
State of the Economy: Crisis and Fiscal Challenges(2025 Budget)
The 2025 budget underscored the economic challenges ‘inherited’ by the Mahama administration. Dr. Forson described the state of the economy as one in deep crisis, citing significant debt and fiscal challenges. “Mr. Speaker, hands on heart, we inherited an economy in deep crisis,” he said. He further highlighted large accumulations of arrears, energy sector shortfalls, and financial sector obligations as major hurdles.
The 2025 budget also notes setbacks in fiscal consolidation, even under the International Monetary Fund (IMF) program introduced in 2023. Despite efforts made through domestic bondholders, external creditors, and taxpayers, key IMF performance indicators remain unmet. Dr. Forson said inflation worsened from 23.2% in 2023 to 23.8% in 2024, exceeding the budget target of 15% by 8.8% and surpassing the IMF’s central target of 18% by 5.8%.
Additionally, the primary balance on a commitment basis declined from a 0.2% deficit in 2023 to a 3.9% deficit in 2024. He further hinted that the 2025 budget contained the previous government’s fiscal slippage which resulted in a 4.4 percentage point deviation from the target surplus of 0.5% of GDP.
Addressing Mounting Arrears and Unpaid Contracts
The 2025 budget also focused on some outstanding government arrears, which have severely impacted contractors and suppliers. “As of December 2024, total central government arrears stood at GHS 67.5 billion, representing 5.2% of GDP,” Dr. Forson said.
“When I assumed office on the 23rd of January 2025, my office was inundated with requests for payment from many contractors and suppliers,” Dr. Forson revealed. He mentioned that to address this, the Ministry of Finance requested all Ministries, Departments, and Agencies (MDAs) to submit details of outstanding arrears for validation. Following a special hearing, the ministry confirmed that the government owes GHS 67.5 billion to contractors and suppliers, including GHS 49.2 billion in outstanding interim payments and GHS 18.3 billion in bank transfer advice from the Controller and Accountant General.
The 2025 budget also highlights additional debts outside this amount, including:
- USD 1.73 billion owed to independent power producers.
- GHS 68 billion owed by the Electricity Company of Ghana to contractors.
- GHS 32 billion owed by Ghana Cocoa Board to suppliers.
- GHS 5.75 billion owed by the Ghana Road Fund.
- GHS 53 billion needed by the Bank of Ghana to address negative equity challenges.
To ensure proper financial management, the 2025 budget mandates an audit of all arrears before any payments are made. “Mr. Speaker, before a penny will be paid, we will permit an audit of arrears payments to guarantee value for money,” Dr. Forson stated.
Unauthorized Contracts and Financial Violations
Another revelation in the 2025 budget is the unauthorized awarding of contracts by MDAs. Validation reports indicate that contracts worth GHS 194 billion—16.5% of GDP—were awarded without proper commencement certificates or authorization. The road sector alone accounts for GHS 100 billion of these contracts.
“Mr. Speaker, most of these contracts were awarded without commencement certificates and authorization. This is in blatant violation of the Public Financial Management Act 1989,” Dr. Forson noted.
As the The government aims to restore economic stability through strict expenditure controls, exchange rate stabilization, and debt restructuring measures outlined in the budget.
As discussions on the 2025 budget continue in Parliament, stakeholders anticipate further insights into the government’s approach to tackling the nation’s economic challenges.
