Ghana to introduce inflation curbing measures in 2025 budget

Ghana is gearing up for the presentation of the 2025 budget on March 11th, with a focus on addressing food inflation and other economic issues in the country. Bank of Ghana Governor, Johnson Asiama, has emphasized the importance of measures to curb inflation and promote economic stability in the upcoming budget. To shed light on the expectations and implications of the budget, Karen Kwarteng, the Head of Global Market Sales at Standard Bank, recently joined CNBC Africa for a discussion. The budget is expected to lay out the government's economic transformation agenda and policy proposals as part of efforts to drive growth, development, and opportunities for all Ghanaians. Reflecting on the current economic landscape, Kwarteng noted positive signs in Ghana's credit fundamentals, such as a surplus in the current account and recovery in foreign exchange reserves, which stand at $8.9 billion. She highlighted the need for fiscal prudence in the upcoming budget, emphasizing the government's efforts to minimize overspending, reduce waste, and enhance tax mobilization. The sentiment in the market suggests that the budget will lean towards austerity measures to ensure fiscal stability. The Ghanaian government's focus on bolstering the agricultural sector, combating corruption, and streamlining government operations was also underscored. President Nana Akufo-Addo's emphasis on 'homegrown' solutions aligns with the strategy to boost domestic revenue mobilization. The implementation of the Ghana card system is seen as a pivotal step in expanding the tax net to encompass more individuals and businesses, particularly in the informal sector. Kwarteng emphasized the importance of leveraging digitalization to enhance tax compliance and attract foreign direct investment. One key aspect highlighted by Kwarteng was the need for Ghana to maintain a stable currency regime and shield itself from external shocks. With global uncertainties, including the impact of a strong US dollar on emerging economies, Ghana must adopt measures to safeguard its reserves and uphold currency stability. The government's commitment to curbing inflation, attracting foreign investments, and improving infrastructure will be critical in fostering a conducive environment for businesses. Looking ahead, Ghana is set to undergo the fourth review of its programme with the International Monetary Fund (IMF) based on fiscal data ending December 2024. Kwarteng expressed confidence that Ghana has met the targets set by the IMF, positioning the country well for future disbursements. The successful management of inflation, stability in the local currency, and adherence to IMF programme guidelines have garnered positive feedback from the international financial institution. As Ghana prepares to unveil its 2025 budget, the overarching goal remains to foster economic stability, spur growth, and enhance the business climate in the country. The prudent fiscal measures outlined in the budget are poised to drive sustainable development and pave the way for a resilient economy in the years to come.