Ghana’s budget deficit objective is reduced following a better-than-expected first half

Ghana’s finance minister announced on Thursday that the country has reduced its 2025 budget deficit target following a better-than-expected first half of the year and promised to restore public finances.

After a protracted debt restructuring procedure, a severe cost of living squeeze, and unrest in its cocoa and gold industries, the West African nation is emerging from its worst economic crisis in a generation.

However, this year’s major macroeconomic indicators have improved, with inflation hitting its lowest level since 2021 in June and growth increasing to 5.3% year-over-year in the first quarter.

Finance Minister Cassiel Ato Forson informed parliament at a mid-year assessment of public finances that the government now anticipates a fiscal deficit of 3.8% of GDP this year, which is less than the 4.1% objective set in March.

The deficit in the first half of the year was 1.1% of GDP, which was higher than the 2.4% objective.

Economic growth might surpass the March target of 4%, according to Forson, and authorities were optimistic that they would meet the year-end inflation target of 11.9% earlier than expected.

“We have borrowed less than we planned, signifying strong expenditure control and fiscal discipline,” added Forson.

“This is a strong signal to the investor community and all stakeholders that the needed fiscal consolidation is happening here in Ghana and it will be sustained.”

Overall revenue and grants fell about 3% short of the goal in the first half of the year, while spending fell 14% short of the goal.

Forson stated that smuggling of maritime gas oil, growing wage pressures, and a lack of customs revenue were among the threats to the national coffers, and Ghana was not yet out of the woods.