President of the Association of Ghana Industries (AGI) Dr. Humphrey Ayim-Darke is warning that the planned expenditure cuts by government could hurt the economy if not well targeted.

He has asked the Finance Minister, Dr. Ato Forson to be tactful with the planned aggressive expenditure cuts in the 2025 Budget, in order not to stifle growth in the coming months.

Dr. Ayim-Darke disclosed this on PM EXPRESS BUSINESS EDITION on February 20, 2025 with host George Wiafe.

“Some economic theories have shown that spending more could stimulate economic growth, therefore any planned cuts should be well targeted, to ensure that economic growth does not suffer”, he said.

He argued that in an economy where government needs to spend to stimulate consumption, any attempts to cut expenditure will be met with scrutiny and concerns due to its impact on productivity and the private sector.  

“We are however mindful about the benefits of these cuts and its impact on checking the deficits” he observed.

Background

President John Mahama at a meeting with the Tripartite Committee announced a Minimum Wage on February 20, 2025, and directed the Finance Minister to embark on aggressive expenditure cuts in the 2025 Budget.

“Cut as much as you can and even the Budget of office of government machinery should not be excused,” he directed.

President Mahama is of the view that, the executive arm of government should be seen to be taking the lead in rationalizing expenditure.

Private sector’s role

Dr. Ayim-Darke said the expenditure cuts should be targeted at areas that would see the private sector come on board through Public Private Partnership to support government, especially on infrastructure projects.

“We are in some challenging times and government cannot do everything, and that is why the private sector is needed. The cutting of such expenditure should also be focused on areas that could see private sector come on board to provide the necessary support in areas that government is struggling”, he said.

Reacting to President Mahama’s revelation that the economy was mismanaged by the previous administration, Dr. Ayim-Darke urged the president to take steps to punish persons engaged in economic crimes.

Budget expectations

Dr. Ayim-Darke advised the Finance Minister to come up with measures that will help manufacturing firms and industries struggling to recover.

“We should come up with measures and policies that help industries to be competitive in these challenging times. A lot of attention must be used to review the tax burden on businesses”.

He added that the 2025 Budget must come up with programmes and policies that could help sustain the current stability of the Ghana cedi.