KPMG 2025 Mid-Year Budget Highlight

The global economy in 2025 continues to navigate a challenging outlook with slowing growth, sustained trade tensions and heightened policy uncertainty. World economic growth is estimated at a rate of 2.8% in 2025, below the pre-pandemic (2000-2019) average of 3.7%. Global Inflation on the other hand, has observed marked moderation, with a projected decline to 2.9%. This uptick is driven by stabilising commodity prices and monetary policy adjustments. However, rising tariff-related pressures could erode these gains if not contained.

The IMF has revised Sub-Saharan Africa's growth forecast for 2025 from 3.6% to 4.2%. However, the region is still faced with deep rooted structural and macroeconomic vulnerabilities that limit its ability to capitalise on the modest improvement.

Ghana’s economy is demonstrating resilience, evidenced by improved key economic indicators. GDP growth exceeded projection, reaching 5.3% in the first quarter of 2025. This growth is a reflection of strong real sector performance, particularly in mining, agriculture, ICT, manufacturing and construction sectors. Consumer price inflation has fallen sharply from 23.8% in December 2024 to 13.7% by June 2025, with a drop in food inflation, driving efforts to achieve the 11.9% target ahead of schedule.

The Ghana Cedi posted remarkable performance against major trading currencies, with the highest appreciation of 42.6% witnessed against the US Dollar. Key indicators (such as improved export and foreign reserves position), fiscal discipline, tightened monetary policy and impact of the IMF program support have contributed to this positive outturn. To sustain this achievement, the Government would have to monitor and respond to the impact of external risks, domestic demand for foreign currency as well as monetary policy dynamics.

On the fiscal end, strong revenue performance and prudent expenditure management underpinned a reduced deficit of 1.1%, below the target of 2.4%. Although the Government missed its overall revenue target marginally, tax revenue target was exceeded, reflecting enhanced collection and compliance measures. Revenue from gold exports also supported a strong inflow position. On the expenditure side, significant cost control measures drove underspending during the half year at 14.3%, below the programmed amount. The Government’s fiscal consolidation strategy, which seeks to sanitize payroll and enhance budgetary controls, will align expenditures firmly to consolidate fiscal gains.

Ghana has made significant progress in addressing its debt situation, owing to the execution of key provisions under the Extended Credit Facility programme with the IMF. This is evidenced by the 15.6% reduction in debt accumulation as at June 2025 and an impressive drop in debt to GDP to 43.8% from 61.8% as at December 2024. There was a drop in proportion of external debt to total debt from 57.4% to 49% at mid-year. The IMF programme is also progressing well, with corrective measures outlined to address slippages and support recovery.

The Minister further outlined key tax initiatives aimed at consolidating fiscal gains and easing the tax burden on citizens and businesses. Important amongst them are the plans to reform VAT and strengthening of tax compliance measures. These reforms, though aimed at addressing structural inefficiencies, should be carefully blended with robust compliance measures and alternative revenue options to mitigate the risk of missing revenue targets.

The 24 hour economy and Accelerated Export Development Programme, Big Push and the GoldBoD initiatives highlight the Government’s commitment to catalyse real sector growth and sustained fiscal stability. The midyear review highlights early wins of the GoldBoD programme, with improved export values, import cover and enhanced gold revenue prospects. The Minister further provides clarity on the 24 hour programme by the identification of the Volta Economic Corridor as the programme’s anchor. The dedicated focus on road infrastructure under the Big Push programme will drive the completion of stalled road projects to progress the nation’s infrastructure gap.

While the fiscal discipline and economic gains observed so far paint a positive picture of the direction of the economy, effective resource planning and mobilisation, collaboration among relevant stakeholders, accountability and proactive sustainability considerations will drive success. The Government, as part of its accountability framework, must have clear and measurable targets, educate stakeholders to enhance buy-in and thus effective implementation.

The outlook as presented by the Minister gives an indication of the Government’s ambition to meet set targets. The fiscal discipline observed and macroeconomic gains, provide a good base for economic resilience. The Government, however, has to be agile in monitoring and responding to external risk and budget execution challenges, to stay on track, towards achieving “the Ghana we want” agenda.