The new National Democratic Congress (NDC) administration has presented its first mid-year budget. Delivered by Finance Minister Dr Ato Forson on July 24, the review offers an early look at the government’s fiscal approach and the economy’s trajectory halfway through the year.
Despite the opportunity to seek additional funds, the minister revised total expenditure for 2025 slightly downward, from GH¢270 billion to GH¢269 billion.
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This restraint appears credible. According to the budget appendix, actual spending in the first half of the year was GH¢18 billion short of target—about 14 percent below plan.
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Most of the gap is due to lower interest payments, helped by a strong cedi and falling Treasury bill rates.
The 91, 182, and 365-day bills now average 15 percent, down from 28 percent in December. The cedi, which opened the year at ¢14.7 to the dollar, now trades at around ¢10.4.
These two factors saved the government GH¢5.1 billion in interest costs.
Overall, total expenditure has dropped, primarily due to the reduction in interest payments.
However, primary expenditure (spending excluding interest) has increased. It rose from a planned GH¢206.8 billion to GH¢209.6 billion, an overshoot of GH¢2.8 billion.
The Finance Ministry attributes this to higher payments in the energy sector. GH¢9.1 billion was spent to cover energy-related shortfalls in just the first six months.
To help plug the gap, the government raised the ESLA levy on fuel, which is expected to generate GH¢2.9 billion in additional revenue.
Still, no major allocations were made to ministries and departments. The Minister for Youth Development, George Opare Addo, had publicly hoped for a budget top-up.
Notably, some spending lines saw deep cuts.
Not a pesewa was spent on petroleum subsidies, electricity lifeline consumers, or the Ghana Gold Board.
Capital expenditure missed its target by over GH¢10 billion.
These are the kinds of cuts that improve short-term fiscal numbers but weaken long-term growth. Construction, in particular, creates jobs, boosts demand, and spurs productivity. Starving it of funds is a mistake.
The government insists that most projects are under audit and that spending will ramp up in the second half of the year. It needs to.
The case of the Ghana Gold Board is especially curious. In the first half of the year, it helped facilitate gold exports worth more than five billion dollars.
This was one of the key drivers behind the cedi’s strong performance. Yet the budget appendix shows that it received no government funding.
The Bank of Ghana’s domestic gold purchase programme may be covering operations for now, but clarity is needed on how the Gold Board is being financed.
So far, only 40 percent of the revised budget has been spent. That leaves 60 percent for the remainder of the year. Inflation concerns may explain the slow pace, but at some point, infrastructure cannot wait.
The NPP minority has been arguing that the government’s improved fiscal position has come more from underspending than discipline.
That is not entirely untrue. Excluding interest savings, the government still spent GH¢13 billion less than it had planned.
But it is not as if nothing was spent. GH¢109 billion has been spent.
Revenue revisions and tax refund realities
The government now expects to raise GH¢2.8 billion more than initially projected. Most of that comes from the bump in fuel levies. But not all revenue lines are holding up.
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Customs revenue missed their first-half target by GH¢1.6 billion.
The finance ministry blames systemic leakages at the port. But another factor is the stronger cedi.
Import duties are calculated in local currency, and a lower exchange rate means fewer cedis collected per dollar.
Projections were likely made when the exchange rate was around GH¢14.7 to the dollar. With the cedi now trading closer to 10.4, it is no surprise that customs collections have underperformed.
A more subtle problem lies in the tax refund account.
Ghana sets aside a portion of total tax revenue for refunds to individuals and firms who overpaid.
That fund used to receive 6 percent of all tax revenue. In the 2025 budget, the threshold was cut to 4 percent.
The rationale was simple. Lower refunds free up money for other spending—GH¢3.8 billion in this case.
This was one of the main justifications for scrapping the e-levy, betting tax, and emissions levy.
But the numbers do not align. Refunds in the first half of the year totalled GH¢5 billion. This is well above the GH¢3.78 billion implied by the new 4 percent rule, and close to the old 6 percent threshold of GH¢5.67 billion.
This suggests that the anticipated savings may not materialise. Either more refunds are being processed than planned, or they tend to be frontloaded.
Either way, the fiscal space created by the change in the Tax Refund account is smaller than advertised.
Debt and bonds
On the debt front, the numbers are encouraging. Ghana’s public debt stock has declined by GH¢113.7 billion.
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The debt-to-GDP ratio now stands at 43.8 percent. This is well below the IMF’s 2028 target of 55 percent. The improvement reflects debt restructuring, a stronger cedi, and lower borrowing costs.
The government now feels confident enough to return to the domestic bond market.
A reopening is planned for August.
JoyNews Research projected this earlier in the year. No details were given on the maturity of the new bonds, but an IMF document from 2024 suggested that the first issuance would be a two-year note.
There was no mention of returning to the international bond market, and for good reason. Ghana’s external debt restructuring is still incomplete. Until that is settled, foreign investors are unlikely to return.
Lingering risks
The mid-year budget identified four key risks: customs underperformance, marine gas oil smuggling, wage pressures, and contracts denominated in foreign currency.
To mitigate these, the finance ministry says all new government contracts will be priced in cedis. This is long overdue.
It has also raised the ESLA on marine fuel, ostensibly to curb smuggling. But the timing suggests it could also be a response to higher-than-expected tax refunds.
So far, the ministry deserves credit. Spending has been restrained. Debt metrics are improving. Inflation has cooled. But the outlook is not bulletproof.
Capital spending must rise, especially if growth is to be sustained and felt throughout the economy.
The tax refund account adjustment may be unravelling. And some of the new revenue measures, like the one-cedi fuel levy hike and early inclusion of fuel costs in electricity tariffs feel rushed.
If the second half of the year sees smart spending and continued macro stability, the government may end 2025 in a stronger position. If not, these early gains could fade fast.
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