Professional services firm, Deloitte, has said that the Ghanaian economy has undoubtedly experienced significant economic headwinds in recent years culminating from an International Monetary Fund (IMF) Extended Credit Facility (ECF) programme, aimed at restoring macroeconomic stability and ensuring debt sustainability.
Despite the positive signs from 2024, Deloitte said, the economy will require structural adjustments to put the country on the path to sustainable economic growth and debt levels.
To set the agenda towards building the desired economy, it noted that the government, in its 2025 Budget Statement, has proposed a number of domestic revenue mobilization measures and expenditure rationalization strategies aimed at stabilizing the economy and improving macroeconomic indicators.
A key highlight of the 2025 Budget Statement is the abolishment of a number of taxes and promised reform of the Value Added Tax (VAT) regime.
“The expected VAT reform would be much welcomed by the business community, and we look forward for this to be initiated and completed in this calendar year.
“The business community is also looking forward to “realignment” of import duties, especially on production inputs, to enable it grow and provide the necessary jobs in the economy,” Deloitte said in its analisis of the 2025 budget statement.
It added “We await specific details on the 24-Hour economy, using government procurement to spur local growth and the “Big Push” strategic infrastructural development programme, which aims to allocate US$10 billion to fund infrastructural development.”
Last is the all-important matter of Ghana’s current debt status and its impact on our overall development.
Deloitte noted that Ghana already has the necessary legal framework for which we look forward to seeing tightening of fiscal responsibility rules to ensure debt sustainability.
The current debt levels within the energy sector, especially in electricity generation and distribution, need to be resolved with the proposed comprehensive and concerted push.
Deloitte further said that the theme running through this year’s budget statement is the need to strike a delicate balance between macroeconomic stability and economic growth.
It indicated that a key component of the government’s approach to achieving the desired macroeconomic stability is revenue mobilisation.
This notwithstanding, Deloitte said, the move by government to deliver on its promise to scrap certain nuisance taxes (e-levy, betting tax, emission levy ) presents notable risk to its ability to achieve the
set revenue target due to the revenue losses that will result from scrapping these tax handles.
“Whilst the revenue-enhancing measures proposed to cover the potential shortfalls from the taxes to be scrapped are commendable, we recommend for extensive stakeholder engagement with the businesses that will be impacted by these measures to ensure the government obtains their buy-in and commitment ahead of implementation,” Deloitte said in its analysis of the 2025 budget statement.
For instance, it added, analysts have begun to hint that the upward review of the growth and sustainability levy for mining companies, if not properly managed, can constrict growth in the sector.
“We have also noted government’s plans to reintroduce road tolls with a tech-driven toll administration system to drive collection efficiency. Whilst the proposal to introduce technology to improve efficiency is commendable, we recommend for the reintroduction of the road tolls to be guided by a comprehensive cost-benefit analysis of same to ensure the revenue to be generated from the tolls will be worth the time and resources to be invested in administering same.
Deloitte also said that they are waiting for specific details on the 24-Hour economy policy idea by the Mahama administration.
He announced this on Tuesday, 11th March, during the presentation of the 2025 Budget Statement and economic policy to Parliament.
Dr Forson noted that the 24-hour economy has the potential to create jobs and foster sustainable economic growth.
“The Mahama-led NDC government is committed to the pursuit of the 24-hour economy policy,” he stated.
“Ghana already has the necessary legal framework for which we look forward to seeing tightening of fiscal responsibility rules to ensure debt sustainability. The current debt levels within the energy sector, especially in electricity generation and distribution, need to be resolved with the proposed comprehensive and concerted push.
“At Deloitte, we are guided by our purpose of making an impact that matters, and in these times, we deliver on this purpose ensuring that our clients, the public and society are abreast of the economic happenings and their effects.
Deloitte further indicated that they support the government’s resolve to cut spending.
READ ALSO: 24-Hour Economy policy will be presented to Parliament for approval – Ato Forson
Deloitte noted that the resolve to cut expenditure could facilitate the restoration of investor confidence and overall macroeconomic stability.
“We support the government’s resolve to be measured in its spending as this can facilitate the restoration of investor confidence and overall macroeconomic stability”, it said in its review of the 2024 Budget.
Professional services firm further indicated that the decline in real GDP growth can be attributed to the expected government’s fiscal tightening stance and aggressive expenditure-cutting measures.
“These measures are expected to limit the government’s ability to roll out some of its key policies and programmes, which, in the short term, is likely to slow down economic growth, hence the projected decline in real GDP growth in 2025”, it said in its analysis of the 2024 Budget and Economic Statement.
Going forward, Deloitte said it is important for the government to reverse the trend of high levels of budget deficits (which averaged about 7.5% over the period 2021-2024) and primary balance deficits as these will increase budget arrears and debt burden amidst the recently constrained fiscal environment resulting from unsustainable debt levels.
It also pointed out that the projected deficit of 3.1% of GDP for 2025 sends a message of prudence on the part of the Government as it navigates through the International Monetary Fund (IMF) Economic Credit Facility programme.
“A key highlight of the 2025 Budget Statement is the abolishment of a number of taxes and promised reform of the Value Added Tax (VAT) regime. The expected VAT reform would be much welcomed by the business community, and we look forward for this to be initiated and completed in this calendar year. The business community is also looking forward to “realignment” of import duties, especially on production inputs, to enable it grow and provide the necessary jobs in the economy.
The post Business community is looking forward to ‘realignment’ of import duties – Deloitte first appeared on 3News.
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