Finance Minister Cassiel Ato Forson has presented the first annual national budget and economic policy statement under the John Dramani Mahama administration to Parliament, sparking intense debate over its economic priorities.
The budget seeks to address structural challenges in Ghana’s economy, which remains heavily dependent on commodity exports and consumer goods imports. It also outlines strategies to manage economic difficulties inherited from the previous administration.
However, former Finance Minister Mohammed Amin Adam has raised concerns over the feasibility of the government’s economic targets.
He pointed out that the projected Gross Domestic Product (GDP) growth rate of 4.0% for 2025 is lower than the 5.7% recorded in 2024. He also questioned the projected decline in Ghana’s gross international reserves, which are expected to cover only three months of imports in 2025 compared to 3.7 months at the end of 2024.
While some analysts dismiss these criticisms as partisan rhetoric, others argue that the budget lacks clear strategies for economic expansion, job creation, and industrial growth.
Key Concerns: Limited Focus on Economic Expansion
A primary concern regarding the 2025 budget is its emphasis on fiscal consolidation, with limited focus on broader economic expansion. While stabilizing public finances is essential, analysts question how the administration intends to improve household economic conditions and create jobs.
Despite the government’s commitment to improving living standards, the budget offers minimal focus on economic diversification. Agriculture receives some attention, with GH¢1.5 billion allocated to the Agriculture for Economic Transformation Agenda. However, the agro-processing industry, which was previously highlighted as a key sector for linking agriculture and manufacturing, has not been given significant focus.
Additionally, while the budget includes technical support for agriculture and cost reductions for equipment, it lacks clear financial assistance strategies for farmers.
Industrial and Trade Policies: Key Gaps Identified
Another major concern is the budget’s limited focus on manufacturing and trade. The Mahama administration has officially discontinued the One District One Factory (1D1F) initiative introduced by the previous government. While the 1D1F program faced challenges under the Akufo-Addo administration, its cancellation removes a policy aimed at decentralizing industrialization and creating jobs in rural areas. Analysts argue that rather than scrapping it, the government could have refined and improved the initiative.
Similarly, the budget lacks comprehensive trade policies. While the Mahama administration has emphasized import substitution to reduce foreign exchange dependency, Ghana’s largest import category—refined petroleum products—cannot currently be produced domestically. The primary policy response has been the discontinuation of the Gold-for-Oil program, which, despite not significantly reducing fuel prices, helped ease pressure on foreign exchange reserves.
Additionally, intermediate production inputs for domestic manufacturing make up approximately two-thirds of Ghana’s non-oil import bill, contradicting the assumption that most imports are finished consumer goods. However, the budget does not outline measures to safeguard access to essential industrial inputs, particularly amid rising global trade protectionism.
AfCFTA and Trade Expansion: A Missed Opportunity?
Despite hosting the secretariat of the African Continental Free Trade Agreement (AfCFTA), the 2025 budget provides minimal focus on leveraging Africa’s growing single market. Increased engagement with AfCFTA could help mitigate Ghana’s import dependency by facilitating intra-African trade through the Pan-African Payments and Settlements System (PAPSS), which enables transactions in local currencies instead of foreign exchange.
Uncertainty Over Job Creation Initiatives
The effectiveness of the administration’s job creation strategy remains uncertain, particularly as the flagship 24-hour economy initiative is yet to be implemented. While the budget prioritizes fiscal consolidation, reducing total expenditures to GH¢269.1 billion (20.7% of GDP) from GH¢279.2 billion (26.0% of GDP) in 2024, concerns remain over whether employment-focused initiatives will receive adequate funding.
For instance, the Women’s Development Bank has been allocated GH¢51.5 million in seed capital, the National Apprenticeship Programme GH¢300 million, and the National Coders Programme GH¢100 million. Collectively, these initiatives, positioned as key job creation mechanisms, will receive less than half a billion cedis, raising doubts about their impact on addressing Ghana’s youth unemployment, currently estimated at 30%.
A key omission in the budget is a direct allocation for the 24-hour economy. Instead, the Finance Minister outlined five key legislative reforms that must be enacted before implementation. As the legislative process will take time, the government has not provided a definitive timeline for the initiative’s rollout.
Conclusion: Strong Fiscal Focus, But Economic Uncertainty Remains
Overall, while the 2025 budget aligns with the Mahama administration’s electoral commitments in principle, it lacks concrete measures to fulfill them. The emphasis on fiscal consolidation may align with International Monetary Fund (IMF) recommendations, but its practical impact on job creation and economic relief for the electorate remains unclear. Key policies remain in their introductory stages, leaving questions about how the administration plans to deliver on its promises.