Ghana’s Budget Deficit to Narrow to 4.2% Next Year – Fitch Solutions Says
Fitch Solutions, the research arm of Fitch Ratings, has projected a reduction in Ghana’s budget deficit as a share of Gross Domestic Product (GDP) for 2025.
According to Fitch Solutions, Ghana’s budget deficit is projected to decline to 4.2% of GDP at end-2025 from 5.9% of GDP this year, marking a year-on-year deficit reduction of 1.7% of GDP.
The reduction in the budget deficit Fitch Solutions posits, will be the back of increased fiscal tightening.
The increased fiscal tightening, Fitch Solutions further notes, will contribute to a deceleration of growth to 4.4% in 2025 from 5.5% in 2024.
“We maintain all our macroeconomic forecasts for Ghana: we continue to project that real economic growth will decelerate from 5.5% in 2024 to 4.4% in 2025, as the new government pursues fiscal tightening. Accordingly, we project the budget deficit will narrow from 5.9% of GDP in 2024 to 4.2% in 2025,” Fitch stated.
Meanwhile, Fitch Solutions has said the removal of taxes such as the COVID Levy, E-Levy, 10% Levy on bet winnings, and the emissions levy will have minimal fiscal impact on the Ghanaian economy.
According to Fitch Solutions, this is because the combined revenue generated from the aforementioned taxes amounts to only 3% of total revenue.
Another reason for the minimal fiscal impact Fitch Solutions further notes is the commitment of the incoming administration to introduce alternative revenue-generating measures, including reducing tax exemptions and reviewing taxes on imports and the mining sector in line with fiscal consolidation objectives under Ghana’s IMF programme.
