Ghana’s Fiscal Outlook Improves as Deficit Set to Narrow in First Half of 2025 — Databank Research
Ghana’s fiscal position is projected to improve significantly by the first half of 2025, with the budget deficit expected to narrow to between 4% and 6% of GDP, according to a recent report by Databank Research.
The improvement is attributed to a combination of delays in arrears clearance, increased International Monetary Fund (IMF) financing, and an anticipated US$370 million disbursement under the IMF’s Extended Credit Facility (ECF).
Databank anticipates a strong start to revenue mobilization efforts in 2025, supported by targeted cuts to capital expenditure (CAPEX). These measures are expected to contribute to a recovery in the primary balance, following a deficit of 3.9% of GDP recorded in 2024.
Arrears Clearance and Fiscal Consolidation
The government plans to allocate GH¢13 billion towards arrears clearance in 2025, in the context of a broader GH¢67 billion backlog. Despite the scale of outstanding obligations, Databank believes there is adequate fiscal space to reduce the overall deficit from the 7.9% of GDP recorded in the previous year.
Crucial to this fiscal discipline is the effective implementation of the Commitment Control and Compliance League Table, designed to enforce budgetary accountability, particularly among Metropolitan, Municipal, and District Assemblies (MMDAs).
External Outlook Remains Positive
Ghana’s short-term external position remains favorable, buoyed by sustained current account surpluses and the gradual operationalisation of GOLDBOD, the country’s gold-backed reserve initiative.
Databank projects that with the US$370 million IMF disbursement and ongoing improvements in reserve buffers, gross international reserves could exceed GH¢10 billion by mid-2025.
This outlook is further supported by robust inflows from gold exports, cash crops, and remittances, which continue to bolster the external sector.
Trade Agreements and Diversified Partnerships
Ghana’s external resilience is also enhanced by expanding trade partnerships with countries like the United Arab Emirates, China, and Switzerland, while its limited exposure to U.S. trade helps shield the economy from potential tariff-related shocks.
Outlook for Q2 2025: Cautious Optimism
Overall, Databank maintains a positive economic outlook for Q2 2025, supported by rising intercontinental trade and strengthening capital account flows. With ongoing reforms, strategic expenditure controls, and enhanced external support, Ghana is on a promising path toward greater macroeconomic stability’s
