Ghana narrows fiscal deficit target after better-than-expected first half

ACCRA – Ghana has narrowed its fiscal deficit target for 2025 after a better-than-expected first six months of the year, its finance minister said on Thursday, pledging to get public finances back on track.

The West African country is emerging from its worst economic crisis in a generation, featuring turmoil in its cocoa and gold industries, a severe cost-of-living squeeze and a lengthy debt-restructuring process.

But this year, key macroeconomic indicators have improved, with growth accelerating to 5.3% year-on-year in the first quarter and inflation falling to 13.7% in June, its lowest since 2021.

The government now expects a fiscal deficit of 3.8% of Gross Domestic Product (GDP) this year, narrower than the 4.1% targeted in March, Finance Minister Cassiel Ato Forson told parliament during a mid-year review of public finances.

In the first six months the deficit was 1.1% of GDP, ahead of the 2.4% targeted.

Forson said economic growth could possibly exceed the March target of 4% and officials were hopeful they could hit the year-end inflation target of 11.9% ahead of schedule.

“We have borrowed less than we planned, signifying strong expenditure control and fiscal discipline,” Forson said.

“This is a strong signal to the investor community and all stakeholders that the needed fiscal consolidation is happening here in Ghana and it will be sustained.”

In the first half of the year, total revenue and grants were roughly 3% short of target, but expenditure came in 14% below target.

Forson said risks to the public purse included a shortfall in customs revenue, mounting wage pressures and smuggling of marine gas oil, adding Ghana was not out of the woods yet.

(Reporting by Emmanuel Bruce and Christian Akorlie; Writing by Anait Miridzhanian and Ayen Deng Bior; Editing by Alexander Winning and Kevin Liffey)