President John Mahama’s 2025 Budget: A Bold Push for Fiscal Discipline, Youth Empowerment, and Social Interventions Amid Debt Concerns
Resident President John Mahama’s 2025 budget sets out an ambitious agenda aimed at steering Ghana toward a more inclusive economy. With a focus on fiscal discipline, youth empowerment, and enhanced social services, the budget comes at a time when Ghana is grappling with rising debt and a growing fiscal deficit.
Fiscal Consolidation and Spending Cuts
The budget reflects a decisive effort to reduce government expenditure, with total spending projected at GH¢269.1 billion—a decrease from GH¢279.2 billion in 2024. This spending cut is part of a broader strategy to stabilize the economy and reduce the fiscal deficit, which is now expected to be GH¢43.8 billion (3.1% of GDP), a marked improvement from the previous year’s GH¢56.9 billion (4.1% of GDP).
Investing in the Youth and Social Services
A cornerstone of the 2025 budget is its emphasis on youth-centered policies and social interventions. Key initiatives include:
- Free Senior High School (Free-SHS) Programme: GH¢3.5 billion allocated to cover tuition, boarding, and related expenses.
- No-Academic-Fee Policy: A new initiative to waive academic fees for first-year public tertiary students, supported by GH¢499.8 million.
- Gender and Nutrition Programs: GH¢292.4 million earmarked for providing free sanitary pads to girls in primary and secondary schools, and GH¢1.788 billion for the School Feeding Programme, set to serve around 3.5 million students.
- Vocational Training and Job Creation: Funding of GH¢300 million for the National Apprenticeship Programme and GH¢100 million for the National Coders Programme to tackle youth unemployment.
Finance Minister of Ghana – Dr. Cassiel Ato Baah Forson
Tax Reforms: A Mixed Bag
In a move that has sparked considerable debate, the budget proposes the abolition of the Electronic Transfer Levy (E-Levy) and the betting tax. The E-Levy, introduced in 2022, was widely criticized for its negative impact on mobile money transactions, and its removal is celebrated by many Ghanaians. Similarly, the decision to eliminate the betting tax has been well-received, although some experts argue that a reduced rate might have been more appropriate to counter the rise in youth gambling.
However, the government’s choice to retain the COVID-19 Levy—albeit with a promise to phase it out later in 2025—has drawn criticism. Critics contend that, given the country’s high debt levels and fiscal deficit, these tax cuts could jeopardize long-term revenue mobilisation. Many point to similar moves during previous administrations where abolished taxes were eventually reintroduced to bridge fiscal gaps.
Debt Management and Economic Sustainability
Ghana’s public debt remains a significant challenge. The government is actively pursuing debt restructuring and reducing domestic borrowing, but the scale of the debt poses substantial risks. While the budget focuses on improving revenue mobilisation through enhanced compliance and comprehensive tax reforms, doubts linger over whether these measures will be sufficient to reduce the fiscal deficit without eventually reintroducing some of the abolished taxes.
Looking Ahead
The 2025 budget represents a delicate balancing act for President Mahama’s administration. On one hand, the budget’s focus on expanding social interventions and investing in youth development is a promising step toward an inclusive economy. On the other, the challenges posed by a high fiscal deficit and a significant debt burden raise concerns about the sustainability of these initiatives.
Ultimately, the government’s ability to maintain fiscal discipline while fulfilling its social promises will be a defining factor in its legacy. As Ghana navigates these economic challenges, the success of the 2025 budget will hinge on striking the right balance between fiscal consolidation and the necessary investments in human capital and social services.
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