Between 60% and 70% of business leaders want the government to prioritise solutions that would result in the Ghanaian economy in a stable and stronger Ghana cedi, reduced public debt, and low interest rates.
Over 50% also expect the 2025 Budget to help bring inflation to single-digit.
According to the PwC Ghana 2025 Budget Digest, these expectations of the business community are consistent with the government’s definition of a rest economy, which is the co-existence of an enabling environment – low interest rates, a stable Ghana cedi and low inflation – for businesses to create jobs and foster inclusive economic growth and development.
These expectations also echo the mood at the two-day National Economic Dialogue as well as the feedback the Minister of Finance received in his engagements with different constituents ahead of his budget presentation to Parliament, including the youth and traders.
“In commenting on the 2025 Budget, we seek to assess how far down the path of economic reset this three-pronged approach and the key policy initiatives would most likely carry the country. We have also been asked “Is the Budget good for business?” We have been candid in our views and have proposed some thoughts for the consideration of the government”, it said in its commentary.
Reducing inflation
The government is targeting an end-year inflation of 11.9%.
PwC said for the government to succeed with inflation reduction interventions via the transport sector, it would have to succeed at currency stability as well as be willing to review the current petroleum tax and levies regime.
Again, considering that the government has already abolished some taxes, it wonder if there is the appetite to dismantle additional taxes on fuel imports.
“While Government seems to be exercising self-restraint in public spending, it still needs to mobilise even more revenue to be able to deliver on the campaign promises of a “better Ghana”. However, if the government would remove some taxes and levies, this could help reduce inflationary pressures in the short term.
Cedi Stability
The Minister’s report indicated that during 2024, the Ghana cedi depreciated by 19.2%, 17.8% and 13.2% to the US dollar, British Pound and the Euro respectively.
In tackling the local currency volatility, the Finance Minister, Dr. Cassiel Ato Forson said the establishment of the Gold Board (GOLDBOD) will help to generate and accumulate more foreign exchange to complement the Bank of Ghana’s market interventions to stabilise the Ghana cedi.
Furthermore, the 24-hour Economy policy, which is expected to be the administration’s hinge for pivoting the economy into an import-substitution and/or an export-oriented one, will help to abate the pressure on the Ghana cedi through demand for foreign exchange.
PwC said in its view said: “We don’t have much to go on by considering that the Budget did not contain enough details about these two policies or programmes. Still, we have commented on the principle as we understand it.”
Reducing interest rates
The Minister of Finance is confident that 2025 Budget will help to achieve lower interest rates and
reduce the crowding out of the private sector.
He argues that by recalibrating the fiscal adjustment to make it more spending cuts-led and by delivering a shock therapy, savings in public expenditure will result in reduced financing needs leading to a fall in interest rates on government-backed instruments.
He reported that in the first two months of the Mahama-led administration, interest rates on Treasury bills have dropped by an average of 1000 basis points, touting that as a testament to growing investor confidence in Ghana’s economic outlook.
PwC said it has not data confirming the claim of growth in credit to the private sector (i.e. crowding-in), but that should be great news for businesses. This is because its pre-budget reading survey respondents ranked “a low interest-rate environment to incentivise borrowing by businesses and households” fourth out of nine economic goals they were invited to prioritise for government focus during their term of office.
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