Govt faces GH₵56.9bn cash flows deficit in 2025

Government’s fiscal outlook for 2025 presents a significant budget deficit challenge, as government expenditure continues to outpace revenue generation.
With total spending projected to reach GH₵290.97 billion by the end of the fiscal year, the government faces a substantial financing gap that requires strategic interventions to ensure economic stability.

GH₵43.8bn overall fiscal deficit
Based on revenue and expenditure estimates, the overall fiscal deficit on a commitment basis is projected at GH₵43.8 billion, representing 3.1% of Gross Domestic Products (GDP).
However, when measured on a cash basis—which accounts for actual cash flows—the deficit expands to GH₵56.9 billion, equivalent to 4.1% of GDP.

GH₵20.3bn primary balance on a commitment basis
Despite this fiscal gap, the primary balance on a commitment basis is expected to record a surplus of GH₵20.3 billion (1.5% of GDP), while the cash basis primary balance will stand at GH₵7.3 billion (0.5% of GDP).
These figures indicate an effort to control expenditure growth relative to revenue, yet the overall deficit remains a pressing concern.

Foreign and domestic borrowing to bridge the gap
To finance the GH₵56.9 billion deficit, the government will rely on a combination of foreign and domestic funding sources.
Foreign net financing is projected at GH₵21.4 billion, representing 1.5% of GDP.
A significant portion of this external financing will come from multilateral institutions, including the International Monetary Fund’s Extended Credit Facility (IMF-ECF), which will provide US$720 million, and the World Bank’s Development Policy Operation (DPO) funding, contributing US$600 million.
However, domestic borrowing will take a larger share of the financing burden, with the government expecting to raise GH₵36.9 billion, equivalent to 2.6% of GDP.
This accounts for 65% of the total deficit financing for 2025.
The funds will primarily be sourced from the issuance of short-term debt instruments in the domestic financial market.

While borrowing from domestic sources helps reduce the country’s reliance on external debt, it also poses risks, including increased competition for funds between the government and private sector businesses.
If excessive, domestic borrowing could drive up interest rates and limit access to credit for businesses, potentially slowing economic activity.

GH₵223.8bn total revenue and grants
For 2025, total revenue and grants are expected to reach GH₵223.8 billion, representing 17.2% of GDP.
This marks an improvement from the GH₵186.5 billion recorded in 2024, which accounted for 17.4% of GDP.
The projected revenue increase is driven by non-oil revenue measures expected to contribute at least 0.5% of GDP.

GH₵269.1bn spending on commitment basis
On the expenditure side, total spending on a commitment basis is projected at GH₵269.1 billion, representing 20.7% of GDP.
This is a decrease from the GH₵279.2 billion (26.0% of GDP) recorded in 2024.
A key component of this spending is primary expenditure, which excludes interest payments.

GH₵204.7bn primary expenditure
In 2025, primary expenditure is projected to be GH₵204.7 billion (15.8% of GDP), marking a reduction from GH₵232.4 billion (21.7% of GDP) in 2024.
The decrease in expenditure suggests an effort to rein in public spending and improve fiscal discipline.

Declining treasury bill rates
To manage Ghana’s debt portfolio effectively, the government has prioritized liability management operations, particularly in the Eurobond market.
A key success in this regard has been the substantial decline in treasury bill rates within the first two months of the new administration.

The 91-day treasury bill rate has fallen from 28.19% to 17.72%, marking a reduction of 1,047 basis points.

Similarly, the 182-day treasury bill rate has dropped from 28.92% to 18.97%, a decline of 995 basis points, while the 364-day treasury bill rate has decreased from 30.15% to 19.93%, reflecting a reduction of 1,022 basis points.

These rate reductions, which exceed 1,000 basis points across all treasury bill maturities, signal growing investor confidence in the government’s economic management.

Lower interest rates on treasury bills translate into reduced borrowing costs for the government and encourage investment in other sectors of the economy.

Furthermore, the declining rates support private sector growth by making borrowing more affordable for businesses, ultimately lowering the cost of doing business.

This development is expected to drive economic activity, enhance productivity, and strengthen the overall investment climate in Ghana.

Implications for economic stability
While the government has taken steps to manage the deficit through increased revenue generation and expenditure control, the reliance on domestic borrowing raises concerns about liquidity constraints and potential crowding out of private sector investment.
Additionally, the success of the fiscal strategy will depend on the government’s ability to sustain investor confidence and ensure efficient allocation of borrowed funds.

As Ghana moves into the 2025 fiscal year, policymakers will need to balance fiscal consolidation with growth-oriented policies.
The reduction in treasury bill rates and improved revenue outlook are positive indicators, but achieving long-term economic stability will require prudent financial management, structural reforms, and enhanced transparency in public spending.

Breakdown of some key allocations

US$279m for GOLDBOD
The government has committed the cedi equivalent of US$279 million as a revolving fund for the Ghana Gold Board (GOLDBOD).
This fund will enable the board to purchase and export at least three tonnes of gold per week from small-scale miners, a move aimed at formalizing the gold sector and ensuring better regulation of the industry.
This initiative will not only boost foreign exchange reserves but also stabilize the local currency and enhance Ghana’s status as a major gold-exporting country.

GH¢13.85bn for Big Push
The Big Push for Infrastructure DevelopmentA staggering GH¢13.85 billion has been allocated for the Big Push Programme, an initiative designed to accelerate infrastructure development across the country.
This allocation will be directed towards constructing roads, schools, hospitals, and other essential projects that will contribute to national development and economic growth.

GH¢499.8m for first-year tertiary students
To ease the financial burden on students, the government has allocated GH¢499.8 million under the No-Fees-Stress initiative. This policy will ensure that all first-year students in public tertiary institutions will not pay academic fees, promoting higher enrollment and accessibility to quality education.

GH¢292.4m free sanitary pads
Recognizing the challenges faced by young girls in accessing sanitary products, the government has set aside GH¢292.4 million to commence the distribution of free sanitary pads to female students in primary and secondary schools.
This intervention seeks to promote menstrual health and reduce absenteeism among female students.

GH¢242.5m for Akosombo Dam spillage victims
To provide relief for those affected by recent disasters, GH¢242.5 million has been allocated to support victims of the Akosombo Dam spillage victims

GH¢200m for tidal wave victims in Ketu South
Another GH¢200 million has been set aside for victims of the tidal wave disaster that displaced residents in Agavedzi and surrounding communities in the Ketu South constituency.
This funding will aid in rehabilitation efforts and provide affected residents with essential relief items and housing support.

GH¢7.6 billion for Free SHS
The government continues to prioritize free secondary education, with a budget allocation of GH¢3.5 billion for the Free Senior High School (SHS) Programme in 2025.
Additionally, by uncapping the GETFund, an extra GH¢4.1 billion will be made available to support free secondary education and related expenditures, ensuring the sustainability and improvement of the programme.

 

GH¢564.6m for curricula-based textbooks
To enhance the learning experience of students, GH¢564.6 million has been allocated for the provision of free curricula-based textbooks.
This includes four sets of KG books and workbooks for about 2.8 million learners, four sets of primary school textbooks for 800,000 learners, nine sets of JHS 3 textbooks for 540,000 learners.

GH¢1.788bn for School Feeding Programme
The budgetary provision for the School Feeding Programme has increased from GH¢1.344 billion to GH¢1.788 billion, reflecting a 33% increase.
Additionally, the cost of feeding per pupil per day has risen from GH¢1.50 to GH¢2.00, further improving the nutritional quality of meals served in schools.

GH¢145.5m for Capitation Grant
The Capitation Grant, which supports basic schools, has been increased from GH¢84 million in 2024 to GH¢145.5 million in 2025, marking a 73.2% increase.
This will ensure schools have more resources to provide quality education.

GH¢683m for teacher and nursing trainee allowances
A total of GH¢203 million has been allocated for teacher trainee allowances, while an additional GH¢480 million has been dedicated to nursing trainee allowances.
These allocations reinforce the government’s commitment to supporting future educators and healthcare workers.

GH¢9.93bn for NHIA
The NHIS will receive a significant boost, with an allocation of GH¢9.93 billion to support claim payments, essential medicines, vaccine procurement, free Primary Healthcare, the Ghana Medical Care Trust (MahamaCares) initiative, bridging the USAID financing shortfall.

GH¢953.5m for LEAP Programme
The Livelihood Empowerment Against Poverty (LEAP) Programme will see an increase in beneficiary households from 350,000 to 400,000 by July 2025.
The budget allocation for LEAP benefits has been raised by 30.8%, increasing from GH¢728.8 million to GH¢953.5 million in 2025.
GH¢2.81bn Road Fund
With the uncapping of the Road Fund, the government has programmed GH¢2.81 billion for the Ghana Road Fund, a 155.5% increase from GH¢1.1 billion in 2024.
These funds will be used exclusively for road maintenance to improve transportation networks nationwide.

GH¢7.51bn for DACF
The District Assembly Common Fund (DACF) has been allocated GH¢7.51 billion, with a proposal to Parliament that 80% of the funds be sent directly to district assemblies.
This will facilitate local economic development and deepen decentralization.

GH¢1.5bn for AETA
A total of GH¢1.5 billion has been earmarked for the Agriculture for Economic Transformation Agenda (AETA).
This will support key programmes such as the Feed Ghana Programme, Ghana Grains Development Project, Vegetable Development Project, and Nkokor Nketenkete.

GH¢51.3m for Women’s Development Bank
To promote financial inclusion for women, GH¢51.3 million has been set aside as a seed fund for the establishment of the Women’s Development Bank, an initiative aimed at providing tailored financial support to female entrepreneurs.

Job creation and skills development
The government has allocated GH¢300 million to the National Apprenticeship Programme, GH¢100 million to the ‘Adwumawura’ Programme, GH¢100 million to the National Coders Programme to enhance digital skills and another GH¢100 million for monthly allowance payments to all Assembly Members.