Energy costs push Ghana’s fiscal deficit slightly above target
Ghana’s fiscal deficit is projected to close 2025 at 3.9 percent of Gross Domestic Product (GDP), slightly above the government’s revised target of 3.8 percent.
This is according to IC Research, which attributes the higher estimate to sustained expenditure rationalisation in the second half of the year, coupled with efforts to boost revenue.
In its assessment of the 2025 Mid-Year Review Budget, the economic research firm noted that strict expenditure controls in the first half of 2025 had eased concerns about the near-term fiscal outlook.
“Although we continue to view the payroll and energy sector obligations as lingering upside risk to the outlook,” IC Research cautioned.
Despite narrowing the overall deficit target, the government maintained its primary surplus target at 1.5 percent of GDP.
IC Research said this decision reflects “an unexpected upsurge in energy sector obligation by GHS2.9 billion to GHS30.0 billion for 2025, with 94.1 percent of the increase already paid in half-year 2025.”
Its investigation found that while the Electricity Company of Ghana largely complied with the Cash Waterfall Mechanism in the first five months of the year, a GHS103.4 million shortfall in January and likely under-collection in the first half contributed to the unplanned energy sector payments.
“This payment uncertainty in the energy sector keeps us cautious on the short-to-medium term fiscal outlook,” the report added.
The government had earlier lowered its 2025 fiscal deficit target from 4.1 percent to 3.8 percent of GDP in the Mid-Year Review Budget, citing a better-than-expected performance in the first half of the year.
The Finance Minister reaffirmed the administration’s commitment to restoring fiscal discipline and putting public finances back on a sustainable path.
