2025 Fiscal Deficit Narrows to 1% as Debt-to-GDP Drops to 45.3%

Government has announced what it describes as a robust fiscal performance in 2025, citing a sharp improvement in public finances, declining debt levels, easing inflation, lower interest rates and a stronger cedi as evidence of a broad-based macroeconomic recovery.

In a statement, the Minister for Finance and Economic Planning, Dr. Cassiel Ato Baah Forson, said 2025 marked one of the most significant economic turnarounds in Ghana’s recent history, following a challenging macroeconomic environment at the close of 2024.

From Fiscal Strain to Surplus

At end-2024, the economy was grappling with significant pressures. The primary balance on a commitment basis had recorded a deficit of 3.0 percent of GDP, the 91-day Treasury bill rate stood at a high 27.7 percent, inflation was 23.8 percent, and the cedi had depreciated by 19.2 percent against the US dollar.

However, the Finance Minister said a combination of fiscal discipline, strengthened commitment controls, revenue reforms, structural adjustments and prudent monetary policy helped restore macroeconomic stability in 2025.

According to the statement, the overall fiscal deficit on a commitment basis narrowed sharply to 1.0 percent of GDP, outperforming the 2.8 percent target. On a cash basis, the deficit was contained at 3.1 percent of GDP, better than the programmed 3.8 percent.

More significantly, the primary balance on a commitment basis swung into a surplus of 2.6 percent of GDP, exceeding the target surplus of 1.5 percent. On a cash basis, government recorded a primary surplus of 0.5 percent of GDP.

The Minister said these outcomes reflect strengthened revenue mobilisation and tighter expenditure controls across the public sector.

Public Debt Declines by GH¢82.1bn

The improved fiscal performance, coupled with what government describes as sound debt management strategies, translated into a significant reduction in the country’s debt stock.

Public debt declined by GH¢82.1 billion—from GH¢726.7 billion (61.8 percent of GDP) in December 2024 to GH¢641.0 billion (45.3 percent of GDP) by December 2025.

Government characterised the reduction as one of the sharpest nominal debt declines in Ghana’s fiscal history.

Inflation, Interest Rates Ease

Macroeconomic indicators also showed marked improvement.Inflation, which stood at 23.5 percent in January 2025, has reportedly fallen for thirteen consecutive months to 3.8 percent by January 2026—a cumulative decline of 19.7 percentage points. Between 2024 and 2025, inflation dropped from 23.8 percent to 5.4 percent.

Interest rates mirrored the disinflation trend. The 91-day Treasury bill rate declined from 27.7 percent at end-2024 to 11 percent by December 2025, and further to 6.5 percent in February 2026.

The average commercial bank lending rate also fell from 30.25 percent in 2024 to 20.45 percent in 2025, with government expressing confidence that further moderation is likely, given the low inflation environment.

Growth Rebounds, Credit Expands

On the growth front, provisional data show real GDP expanding by 6.1 percent year-on-year in the first three quarters of 2025, driven largely by services and agriculture.

Non-oil growth was even stronger at 7.5 percent over the same period, compared to 5.8 percent in the corresponding period of 2024.

Credit to the private sector expanded by GH¢17.1 billion in 2025, signalling improved liquidity conditions and enhanced support for business activity.

Stronger Cedi, Improved External Position

The cedi also staged a strong recovery. By end-December 2025, it had appreciated by 40.7 percent against the US dollar, reversing the 19.2 percent depreciation recorded in 2024. The currency also gained 30.9 percent against the pound sterling and 24.0 percent against the euro.

Ghana’s external position strengthened considerably, with the current account recording a surplus of US$9.1 billion at end-December 2025, up from US$1.5 billion in 2024.

Gross international reserves rose to US$13.8 billion, providing cover for approximately 5.7 months of imports.

Broad-Based Recovery

Government maintains that the macroeconomic turnaround is broad-based, with improvements recorded across key fiscal, monetary and external indicators between 2024 and 2025.

With inflation at 3.8 percent, Treasury yields trending downward, debt ratios declining and growth rebounding, the Finance Ministry argues that public finances are now firmly on a sustainable path, while macroeconomic stability has been restored.

 

 

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