Professional services firm Deloitte has indicated that Ghana’s expected real Gross Domestic Product (GDP) growth of 4.0% in 2024 appears reasonable and achievable.
According to its view of the 2024 Budget, the decline in real GDP growth can be attributed to the expected government’s fiscal tightening stance and aggressive expenditure-cutting measures.
“These measures are expected to limit the government’s ability to roll out some of its key policies and programmes, which, in the short term, is likely to slow down economic growth, hence the projected decline in real GDP growth in 2025”, it said in its analysis of the 2024 Budget and Economic Statement.
Going forward, Deloitte said it is important for the government to reverse the trend of high levels of budget deficits (which averaged about 7.5% over the period 2021-2024) and primary balance deficits as these will increase budget arrears and debt burden amidst the recently constrained fiscal environment resulting from unsustainable debt levels.
It also pointed out that the projected deficit of 3.1% of GDP for 2025 sends a message of prudence on the part of the Government as it navigates through the International Monetary Fund (IMF) Economic Credit Facility programme.
“We support the government’s resolve to be measured in its spending as this can facilitate the restoration of investor confidence and overall macroeconomic stability”, it added.
Economic Expansion Needed to Address Mounting Unemployment
Notwithstanding the expected cuts in government spending, Deloitte also said the need for government to facilitate economic growth has become even more critical as the expansion in the economy is required to address the mounting unemployment situation.
In this regard, it stressed that the plan to prioritise investments in selected sectors that can propel economic growth and create jobs is commendable although it must be pointed out that achieving such a delicate balance can be very challenging.
“Given the moderate growth projection for 2025, we advise for expectations regarding job creation in 2025 to be measured as the government appears to be prioritising macroeconomic stability, which is the required foundation for sustainable growth into the future”.
“We have identified the growing Energy Sector debts and arrears (and the potential power sector crisis that may result from same if not swiftly addressed) as a major threat to the projected economic growth. This is primarily because the projected growth is expected to be driven by expansion in industry, which is powered by the energy sector. We recommend that the government takes swift action to engage key players to agree on a roadmap for settling these debts to ensure a sustainable and consistent power supply to spur the growth of the economy”, it concluded.
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