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Ghana's 2025 Mid-Year Budget Review: Key Highlights and Economic Outlook

Finance Minister Presents 2025 Mid-Year Budget Review to Parliament: Key Highlights and Economic Outlook

In a highly anticipated session in Ghana's Parliament, the Minister of Finance, Dr. Mohammed Amin Adam, delivered the 2025 Mid-Year Budget Review, providing a comprehensive update on the nation's fiscal performance, economic challenges, and strategic priorities for the remainder of the year. The presentation, streamed live and attended by Members of Parliament, government officials, and economic stakeholders, underscored the government's commitment to fiscal discipline amid global uncertainties and domestic pressures. Dr. Adam's address highlighted achievements in macroeconomic stability, outlined revisions to budgetary allocations, and proposed measures to bolster growth, employment, and social welfare.

The Minister began by painting a picture of Ghana's economic landscape in the first half of 2025. He noted that despite headwinds such as fluctuating commodity prices, geopolitical tensions, and the lingering effects of climate change on agriculture, the economy had shown resilience. Provisional data indicated a GDP growth rate of 4.2% in the first quarter, slightly above initial projections, driven primarily by robust performances in the services and industrial sectors. Agriculture, however, faced setbacks due to erratic weather patterns, with cocoa production declining by 15% compared to the previous year. Dr. Adam attributed this to the impacts of illegal mining and smuggling, which have degraded farmlands and disrupted supply chains. To address these issues, the government plans to intensify efforts under the Planting for Food and Jobs initiative, allocating an additional GH¢500 million for irrigation projects and farmer support programs.

On the fiscal front, the Minister reported that revenue collection had exceeded targets by 8%, reaching GH¢78 billion in the first six months. This surplus was largely due to improved tax administration, including the digitalization of revenue systems through the Ghana Revenue Authority's e-levy enhancements and value-added tax reforms. However, expenditures remained a concern, with total spending hitting GH¢95 billion, driven by higher-than-expected costs in debt servicing and public sector wages. The fiscal deficit stood at 5.1% of GDP, narrower than the budgeted 6.5%, reflecting prudent management and the successful restructuring of external debts under the IMF's Extended Credit Facility program. Dr. Adam emphasized that Ghana's debt-to-GDP ratio had declined to 72% from 78% at the end of 2024, a positive development that enhances investor confidence and reduces borrowing costs.

Inflation management emerged as a key theme in the review. The Minister announced that headline inflation had moderated to 18.5% in June 2025, down from 23% at the year's start, thanks to tight monetary policies by the Bank of Ghana and stable foreign exchange reserves. Food inflation, however, remained elevated at 22%, prompting targeted interventions such as subsidies on fertilizers and imported staples. To further curb inflationary pressures, the government intends to introduce price stabilization mechanisms for essential commodities, including a GH¢200 million fund for buffer stock management. Dr. Adam also touched on exchange rate stability, noting that the cedi had depreciated by only 4% against the US dollar in the first half, supported by remittances and gold exports totaling $3.2 billion.

Employment and social protection were highlighted as priorities for inclusive growth. The Minister revealed that over 150,000 jobs had been created through initiatives like the One District, One Factory program and youth entrepreneurship schemes. Unemployment rates among the youth had dropped to 12.5%, but challenges persist in rural areas. To bridge this gap, the budget review includes an upward revision of allocations to the National Youth Employment Agency by GH¢300 million, focusing on skills training in digital technologies and agribusiness. Social welfare programs, such as the Livelihood Empowerment Against Poverty (LEAP), will see expanded coverage to include 500,000 additional beneficiaries, with cash transfers increased by 20% to counter rising living costs.

Infrastructure development received significant attention, with Dr. Adam outlining progress on flagship projects. The Agenda 111 hospitals initiative is 65% complete, with 50 facilities expected to be operational by year-end, funded through a mix of domestic revenues and development partner support. Road construction under the Year of Roads program has seen 1,200 kilometers of highways rehabilitated, improving connectivity and boosting trade. The Minister proposed supplementary funding of GH¢1.2 billion for ongoing projects, including the expansion of the Tema-Mpakadan railway line to enhance regional integration with neighboring countries.

Energy sector reforms were another focal point. Dr. Adam addressed the persistent issue of power supply reliability, noting that generation capacity had increased to 5,500 MW, reducing outages significantly. However, legacy debts in the sector remain a burden, with the government committing to clear GH¢2 billion in arrears to independent power producers. To promote renewable energy, incentives for solar installations will be enhanced, including tax rebates for households and businesses adopting green technologies. The Minister projected that these measures would contribute to a 10% reduction in energy costs for consumers by 2026.

In terms of trade and investment, the review highlighted Ghana's performance under the African Continental Free Trade Area (AfCFTA). Exports grew by 12% to $8.5 billion, led by non-traditional items like processed foods and pharmaceuticals. To capitalize on this, the government plans to establish three new export processing zones in the northern regions, with an initial investment of GH¢400 million. Foreign direct investment inflows reached $1.8 billion, primarily in mining and manufacturing, bolstered by reforms in the investment promotion framework.

Dr. Adam did not shy away from acknowledging risks ahead. He warned of potential disruptions from global events, such as the ongoing conflicts in Europe and the Middle East, which could spike oil prices and affect import bills. Domestically, election-year spending pressures and climate vulnerabilities pose threats to fiscal targets. To mitigate these, the Minister proposed a contingency fund of GH¢1 billion and stricter expenditure controls, including a moratorium on non-essential procurements.

The presentation also included updates on key policy reforms. Tax measures were revised to include a 5% reduction in corporate tax for small and medium enterprises in the agricultural sector, aimed at stimulating investment. Excise duties on alcoholic beverages and tobacco will be increased by 2% to generate additional revenue while promoting public health. On the expenditure side, subsidies for fuel and electricity will be rationalized, with savings redirected to education and healthcare. The education budget sees a 15% increase, funding free senior high school expansions and teacher training. Health allocations rise by 12%, supporting vaccine procurement and disease surveillance amid global health threats.

In his concluding remarks, Dr. Adam reiterated the government's vision for a self-reliant Ghana, emphasizing the need for collective effort from all stakeholders. He called on Parliament to approve the supplementary estimates totaling GH¢5.8 billion, which would adjust the 2025 budget framework without increasing the overall deficit ceiling. The Minister expressed optimism that with continued fiscal prudence and structural reforms, Ghana could achieve a growth rate of 5.5% by year-end, paving the way for sustainable development.

The session sparked lively debates among MPs, with opposition members questioning the realism of projections and calling for greater transparency in debt management. Government MPs, however, praised the review as a testament to effective economic stewardship. As the livestream concluded, economic analysts noted that the mid-year review provides a balanced assessment, blending optimism with caution, and sets the stage for Ghana's economic trajectory in the latter half of 2025.

This comprehensive update not only reflects the government's adaptive strategies but also underscores the interplay between domestic policies and global dynamics. By focusing on revenue enhancement, expenditure efficiency, and targeted investments, the 2025 Mid-Year Budget Review aims to foster resilience and prosperity for all Ghanaians. As the nation navigates these economic waters, the implementation of these measures will be crucial in realizing the outlined goals.

Read the Full Ghanaweb.com Article at:
[ https://www.ghanaweb.com/GhanaHomePage/business/LIVESTREAMED-Minister-of-Finance-presents-2025-Mid-Year-Budget-Review-in-Parliament-1993101 ]