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LIVESTREAMING: Minister of Finance delivers 2025 Mid-Year Budget Review in Parliament

Finance Minister Delivers Comprehensive 2025 Mid-Year Budget Review Amid Economic Recovery Efforts

Accra, Ghana – In a highly anticipated session in Parliament, Dr. Mohammed Amin Adam, Ghana's Minister of Finance, presented the 2025 Mid-Year Budget Review, outlining the government's fiscal strategies, economic performance, and policy adjustments for the remainder of the year and into 2025. The presentation, streamed live from the parliamentary chamber, drew attention from lawmakers, economists, business leaders, and the general public, as it addressed key challenges such as inflation, debt sustainability, and growth projections in the face of global economic uncertainties.

Dr. Amin Adam began his address by reflecting on the macroeconomic environment that has shaped Ghana's economy in the first half of 2024. He highlighted the resilience of the economy despite external shocks, including lingering effects of the COVID-19 pandemic, geopolitical tensions from the Russia-Ukraine conflict, and fluctuating commodity prices. According to the minister, Ghana's GDP growth for the first quarter of 2024 stood at 4.7%, surpassing initial projections and signaling a rebound from the previous year's slowdown. This growth was largely driven by strong performances in the agriculture and services sectors, with agriculture contributing significantly through improved cocoa and non-traditional export yields.

The minister emphasized the government's commitment to fiscal discipline under the ongoing IMF-supported program. He noted that total revenue and grants for the first half of the year amounted to approximately GH¢74.5 billion, representing about 49% of the annual target. This figure reflects a 21% increase compared to the same period in 2023, attributed to enhanced tax collection mechanisms, including digitalization efforts by the Ghana Revenue Authority (GRA). Key revenue sources included taxes on income and property, which rose by 18%, and value-added tax (VAT) collections, which benefited from broader compliance initiatives.

On the expenditure side, Dr. Amin Adam reported that total expenditures, including arrears clearance, reached GH¢82.3 billion in the first six months, slightly above the programmed amount due to higher-than-expected spending on social intervention programs. He detailed allocations to flagship initiatives such as the Free Senior High School (SHS) program, which received GH¢2.1 billion, and the National Health Insurance Scheme (NHIS), funded to the tune of GH¢1.8 billion. Infrastructure development also saw significant outlays, with GH¢5.4 billion directed towards road construction and energy projects under the Agenda 111 hospital initiative.

A major focus of the review was inflation management. The minister reported that headline inflation had declined to 23.1% as of June 2024, down from 42.5% in the same period last year, thanks to prudent monetary policies by the Bank of Ghana and stable foreign exchange reserves. However, he acknowledged persistent pressures from food prices and imported inflation, projecting an end-of-year inflation rate of around 15% if current trends hold. To mitigate these, the government plans to intensify support for local food production through subsidies on fertilizers and irrigation projects.

Debt sustainability remained a critical theme in the presentation. Dr. Amin Adam updated Parliament on the progress of Ghana's debt restructuring efforts under the G20 Common Framework. He announced that negotiations with external creditors have advanced, with agreements in principle reached for restructuring about $5.4 billion in bilateral debt. Domestically, the government has successfully exchanged GH¢31 billion in bonds under the Domestic Debt Exchange Program (DDEP), which has helped reduce the debt-to-GDP ratio from 88.1% at the end of 2023 to an estimated 76.2% by mid-2024. The minister projected that with continued fiscal consolidation, the ratio could drop below 70% by the end of 2025, aligning with medium-term targets.

Looking ahead to 2025, the minister outlined ambitious fiscal policies aimed at fostering inclusive growth. He proposed a provisional budget framework with an overall GDP growth target of 5.0% for 2025, supported by investments in digital economy, renewable energy, and small and medium-sized enterprises (SMEs). Revenue projections for 2025 are set at GH¢198 billion, a 15% increase from 2024 estimates, to be achieved through tax reforms, including the introduction of a unified tax administration system and measures to curb illicit financial flows.

Expenditure for 2025 is budgeted at GH¢226 billion, with priorities including education (20% of the budget), health (15%), and infrastructure (18%). Dr. Amin Adam announced new initiatives, such as a GH¢500 million fund for youth entrepreneurship and a green bond issuance to finance climate-resilient projects. He also addressed the energy sector, revealing plans to invest GH¢3 billion in expanding the national grid and promoting solar energy to reduce reliance on thermal power and cut electricity tariffs by up to 10% for households.

The review included updates on social protection programs. The Livelihood Empowerment Against Poverty (LEAP) program will see an expansion to cover an additional 100,000 vulnerable households, with benefits increased by 20% to counter inflationary impacts. Additionally, the minister highlighted the School Feeding Program's role in supporting over 3 million pupils, with funding boosted to ensure nutritional standards are met.

In terms of sectoral performance, agriculture was praised for its 5.1% growth in the first half of 2024, driven by the Planting for Food and Jobs initiative. The industrial sector grew by 4.2%, bolstered by mining and manufacturing, while services expanded by 5.3%, led by tourism and financial services. However, the minister cautioned about risks such as climate change impacts on agriculture and global oil price volatility affecting the import bill.

Dr. Amin Adam also touched on employment and job creation, noting that the government's YouStart program has created over 50,000 jobs for young entrepreneurs since its inception. He projected the creation of 200,000 additional jobs in 2025 through public-private partnerships in agribusiness and technology.

The presentation was not without its forward-looking policy adjustments. In response to calls for tax relief, the minister proposed reducing the Electronic Transfer Levy (E-Levy) from 1.5% to 1% on transactions above GH¢100, effective from January 2025, to encourage digital payments and financial inclusion. He also announced incentives for electric vehicle imports, including duty waivers, to promote sustainable transportation.

Parliamentary reactions were mixed. Members of the ruling New Patriotic Party (NPP) commended the minister for the positive economic indicators and strategic foresight, with some hailing the debt restructuring progress as a "milestone in economic recovery." Opposition members from the National Democratic Congress (NDC), however, criticized the government for what they described as overly optimistic projections amid high living costs. Minority Leader Dr. Cassiel Ato Forson questioned the sustainability of the growth figures, pointing to rising youth unemployment and the need for more aggressive measures against corruption in public spending.

Economists outside Parliament offered varied analyses. Dr. John Kumah, an economic analyst, praised the focus on fiscal prudence but warned that external factors like global recession risks could derail projections. The Ghana Chamber of Commerce and Industry welcomed the SME support but called for clearer timelines on infrastructure projects.

In his concluding remarks, Dr. Amin Adam reiterated the government's dedication to building a resilient economy that benefits all Ghanaians. "This mid-year review is not just a report card; it's a roadmap to prosperity," he stated, urging bipartisan support for the proposed measures.

The session concluded with a call for questions and debates, setting the stage for further parliamentary scrutiny. As Ghana navigates its path to economic stability, the 2025 Mid-Year Budget Review underscores a blend of caution and optimism, with a clear emphasis on sustainable development and inclusive policies. The full details of the review are expected to be published in the coming days, providing deeper insights for stakeholders. (Word count: 1,048)

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