The Ghanaian economy is now recovering thanks to the IMF programme.

Growth has rebounded exceeding initial expectations. The disinflation path, though slowed in 2024, is likely to continue throughout 2025.

The financial sector which lubricates the economy is growing well. Consumer sentiments and business confidences are growing since 2024.

The global economy has been resilient throughout 2024 to the first few months of 2025.

However, the frictions arising from an emerging tariff war, elevated interest rates, and geopolitical tensions which have heightened uncertainty about the global growth outlook are the threats to both global economy and the domestic economy.

These negativities have threatened consumer and business sentiments as well as investor confidence, thereby posing serious risks to growth.

These developments have stalled the disinflation path in some advanced economies, and have pushed up long term inflation expectations. In response, many countries continue to tighten monetary policies, and this is likely to lead to a decline in capital flows to emerging economies.

However, the development in the global economy could stall the recovery path of the Ghanaian economy if measures are not taken.

The magnitude of the impact of these global developments on the Ghanaian economy depends on the extent of exposure to the outside world. The Ghanaian economy is an import-dependent economy.

This means that consumption depends not on local production, but on imports. The Ghanaian economy is very much exposed to the global economy.

The government’s commitment to continue the fiscal consolidation process started by the previous administration started under the IMF-ECF programme is commendable.

The government intend to pursue the front loaded fiscal consolidation in 2025 on the path of expenditure-led fiscal adjustments.

That is why they have decided to cut their expenditure by some GHC 10 billion in 2025.

The intention of the government is to pursue revenue-led fiscal adjustments from 2026.

On Friday, the Monetary Policy Committees (MPC) of the central bank increased the policy rate by 100 basis points from 27% to 28%. Under the IMF programme, there is no financing from the central bank.

These tight fiscal and monetary policies will obviously have a negative impact on GDP growth.

It is therefore not surprising that the GDP growth rate has been revised downward from 5.7% in 2024 to 4.0% in 2025. Non-oil GDP growth rate has also been revised downwards from 6.0% to 4.8%.

The end-period inflation rate is expected to reach 11.9% in 2025 from 23.8 in 2024. From the theory of the Philips curve, unemployment rate is expected to rise. In addition, there is a net freeze on employment at the same time.

The above-mentioned measures though commendable, may not be enough to mitigate the effects of any possible exchange rate hikes on inflation and the economic activities.

There is a passthrough-effect of the exchange rate movements to inflation. Exchange rate hikes, increases international fuel prices, transportation fare, and utility tariff upward adjustments still remain threats the economy in 2025.

It is recommended to government to pursue local production, which would in turn reduce the demand for foreign currency, and create jobs.

The much touted 24-hour economy is believed to be the game changer according the NDC government.

They campaigned heavily with it and won the 2024 general elections. Ghanaians are expecting them to deliver.

Unfortunately, the 24-hour economy policy did not receive the much-needed attention in the 2025 budget.

The policy is yet to be resourced and implemented. It is, therefore, suggested that the government should as a matter of urgency resource and implement their 24-hour policy, since according to them, economic transformation revolves it.

A key initiative of the government to spur growth and job creation is what the government calls the Big Push, described in the budget statement as a policy “for rapid infrastructure development The government has also promised a big push of US$ 10 billion. But only US$870 million has been allocated in the 2025 budget.

This clearly is not enough. A critical scrutiny of the budget reveals that the Big Push is not going to accelerate public investment as a share of revenue, which has generally been low in Ghana to begin with.

Rather, public investment as a share of total revenue and grants is projected to fall in 2025 and remain below historical levels over the medium term.

Specifically, in 2025, central government capital investment as a share of revenue is projected to fall to 14.6% from 15.8% in 2024.

It is recommended to government to ensure that the “Big Push” initiative reflects in significant increase in public investment ratios to accelerate economic growth beyond what the government has projected.

The country needs good infrastructure investment and a sound macroeconomic environment for the private to flourish.
There is also the need for active private sector participation in the delivery of infrastructure development since the government have decided to cut its expenditure.

To mitigate the impact on the poor and vulnerable in society, it is recommended to government to invest in its safety nets protect them.

Written by: Kwabena Nyantakyi