Following Ghana's successful restructuring of 90% of its domestic and external debt and plans to reinstate the fiscal responsibility law, which caps the fiscal deficit below 5% of Gross Domestic Product, the government's commitment to fiscal consolidation is expected to remain strong.

According to Databank Research, it remains optimistic that spending pressures will stabilise by 2025, with a projected decrease from our its 2024 estimate of 5.0% ± 50 basis points to 4.7% ± 25 basis points in 2025.

The government aims for a targeted 1.8% reduction in the fiscal deficit and a 0.5% primary surplus in 2025, a crucial requirement under the International Monetary Fund-supported programme.

“We believe key initiatives, like the Medium-Term Revenue Strategy and a newly integrated property tax system, may help achieve the aforementioned target, all things being equal. However, pressures to remove certain tax measures may necessitate intensified revenue mobilisation efforts, potentially leading to the renegotiation and extension of Ghana’s US$3.0 billion IMF bailout programme”, Databank Research mentioned.

“With global tensions easing, we expect limited systemic shocks in 2025, allowing Ghana's fiscal operations to remain within budgetary targets”, it added.

Positive External Balance Expected Despite Tight Forex Reserves

For the external sector, it believed Ghana's Balance of Payments will remain positive, stabilising within 1.5% to 2% of GDP, driven by enhanced crude oil export revenues, improving cocoa production, and anticipated tariff reductions.

“We expect private consumption and foreign direct investment to recover, with the capital account balance moving out of negative territory. While net transfers may bolster the current account balance, scheduled coupon payments on restructured debt could strain financial buffers in the short term”, it explained.

Nonetheless, with a forecasted reduction in inflation to around 12.4%, it expects investor confidence to rebound, paving the way for a more resilient external environment.