The Institute of Economic Affairs (IEA) has urged the government to utilise the nation's abundant resources to drive investments in physical and human capital sectors as well as technology to accelerate economic growth.
In its latest report, the IEA emphasised that while the International Monetary Fund (IMF) programme projects Ghana’s real Gross Domestic Product(GDP) growth to rise to 4.4 per cent in 2025, 4.9 per cent in 2026, and plateau at 5.0 per cent between 2027 and 2029, these rates remain below the country’s potential.
The report pointed out that “Ghana has excess resources and capacities to enable it grow at higher rates, which are needed to accelerate development and alleviate poverty.”
Recommendations for Budget
The IEA outlined key areas for the 2025 budget, which is expected to align with the Extended Credit Facility (ECF) programme, and proposed significant changes.
On Tax reforms, the institute recommended abolishing certain taxes, including the e-levy, Covid tax, emissions tax, and betting tax, as part of the government’s pre-election promise.
These measures the IEA stated, are expected to ease the financial burden on tax-paying households and businesses.
To compensate for the revenue loss, the IEA advised the government to plug tax loopholes, broaden the tax net, and strengthen tax administration.
On Expenditure savings, the report highlighted the need for cost-cutting measures, including establishing a leaner administration, reducing wasteful spending and lowering debt service costs through restructured public debt.
It warned, however, that resuming debt servicing would put pressure on the budget and exchange rate, and called for measures to mitigate these effects while fostering investor confidence and avoiding another debt restructuring.
Capital expenditure
The IEA urged the government to increase Capital Expenditure (CAPEX) to at least 10 per cent of GDP over the medium term, noting that current levels of 3-4 per cent are insufficient for long-term growth.
"Higher CAPEX would accelerate economic growth, foster job creation, and improve living standards, it is our expectation that the 2025 budget will mark the beginning of turning around budgetary allocations to CAPEX,” the report noted.
The IEA proposed a revival strategy for the cocoa sector, including ensuring a living producer price to encourage production and phasing out the failed syndication financing scheme for cocoa purchases.
It stressed the need to address the threat of illegal mining or “galamsey” to cocoa farms and reducing operational costs at Cocobod to restore the sector's financial viability.
Power supply
On the issue of stable power supply, the report emphasised the need for a comprehensive plan to ensure stable and less costly power supply, which is critical to boosting the economy’s competitiveness.
Sustainable growth
The IEA concluded that leveraging Ghana’s abundant resources, addressing inefficiencies, and fostering growth-oriented policies in the 2025 budget could unlock the country’s potential and achieve sustainable economic development. The institute called on the government to make bold decisions and align its fiscal policies with long-term national interests to improve living standards and reduce poverty.
