President of the Association of Ghana Industries (AGI), Dr. Humphrey Ayim-Darke, has warned that the government’s planned expenditure cuts could harm the economy if not properly targeted.
He urged Finance Minister Dr. Ato Forson to be strategic in implementing the aggressive spending reductions in the 2025 Budget to avoid stifling economic growth.
Speaking on PM Express Business Edition on February 20, 2025, with host George Wiafe, Dr. Ayim-Darke noted, “Some economic theories suggest that increased spending can stimulate growth, so any planned cuts should be carefully targeted to ensure economic expansion is not compromised.”
He cautioned that in an economy where government expenditure drives consumption, any attempt to reduce spending must be scrutinized for its impact on productivity and the private sector.
“We are, however, mindful of the benefits of these cuts and their role in controlling the deficit,” he added.
Background
President John Mahama, during a meeting with the Tripartite Committee on February 20, 2025, announced a new minimum wage and directed the Finance Minister to implement aggressive expenditure cuts in the 2025 Budget.
“Cut as much as you can, and even the budget for the Office of Government Machinery should not be exempt,” he instructed.
Mahama emphasized that the executive branch must take the lead in rationalizing government spending.
Private Sector’s Role
Dr. Ayim-Darke stressed that expenditure cuts should focus on areas where the private sector can step in through Public-Private Partnerships (PPP) to support infrastructure development.
“We are in challenging times, and the government cannot do everything alone. That is why the private sector is needed. Spending cuts should target areas where the private sector can provide the necessary support,” he said.
Reacting to President Mahama’s claim that the previous administration mismanaged the economy, Dr. Ayim-Darke urged the government to take decisive action against individuals involved in economic crimes.
Budget Expectations
He advised the Finance Minister to introduce policies that would support struggling manufacturing firms and industries.
“We need measures and policies that enhance the competitiveness of industries in these difficult times. The tax burden on businesses must be reviewed,” he said.
Dr. Ayim-Darke also called for policies in the 2025 Budget that would help sustain the relative stability of the Ghana cedi.
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