Ghana’s fiscal deficit is predicted to reach 3.9% of GDP by the end of 2025, which is higher than the government’s 3.8% estimate.
Leading economic research firm IC Research claims that this will happen as a result of the government’s pledge to continue spending rationalization initiatives in the second half of 2025 while promoting income growth.
It stated in its evaluation of the 2025 Mid-Year Review Budget that, “Although we continue to view the payroll and energy sector obligations as lingering upside risk to the outlook,” the severe spending restraint in the first half of 2025 has greatly reduced its worries about the near-term fiscal outlook.
Surprisingly, the government maintained the target primary surplus at 1.5% of GDP despite compressing the overall deficit objective.
“Our analysis revealed that the unchanged fiscal anchor for 2025 reflects an unexpected upsurge in energy sector obligation from GH¢2.9bn to GH¢30.0bn for 2025 with 94.1% of the increase already paid in half-year 2025.”
“Our investigations revealed that while the Electricity Company of Ghana has broadly complied with the Cash Waterfall Mechanism in 5M2025, a GH¢103.4 million shortfall in January 2025 and a likely under-collection in the first half of 2025 contributed to the unplanned energy sector payment,” it added.
IC Research noted that the oil sector is worried about its short- to medium-term fiscal outlook due to payment uncertainties.
The government reduced its target budget deficit for 2025 from 4.1% of GDP in the Mid-Year Review Budget to 3.8% of GDP.
Its finance minister stated on Thursday that this came after the first half of the year had performed better than anticipated and promised to restore the public finances.
Source: newsthemegh.com