Ghana’s Q1 2025 budget allocates ₵68.13 billion, with over 56% for debt servicing and employee compensation, leaving less than 1% for capital investment.
Ghana’s Parliament on Thursday, January 2nd, 2025 approved the 2025 mini-budget Expenditure in Advance of Appropriation for the first quarter of the year.
This long-delayed approval came after a parliamentary standoff between the NPP and NDC sides over which caucus constitutes the majority. The stalemate led to the suspension of parliament affecting a number of government businesses including the mini-budget for the first quarter of the year as the country goes through transition amid the 2025 mini-budget discussions.
The delay threatened a total government shutdown as the government could not spend in the absence of the 2025 mini-budget.
After the issue was resolved by the Supreme Court and the back and forth following the resumption of sitting, the Minister for Finance, Dr. Mohammed Amin Adam presented the document to the House which was subsequently approved two days after the commencement of the fiscal year. This was essential considering the impact of the 2025 mini-budget on government operations.
The Minister for Finance requested that the House approve an amount of GHC 68.13 billion to ensure continuity of governance in the first three months of the year. Parliament after referring the document to the Budgets and Finance Committees of the House subsequently approved the request of the minister.
Following the approval by the House, many Ghanaians have been asking for the details of the requested amount in the 2025 mini-budget. The Ghana Times has compiled the breakdown of the amount and its possible impact.
1. Interest Payment: This item took the greatest share with an allocation of GHC 20.62 billion representing a whopping 30.26% of the total amount. This underscores Ghana’s huge debt burden limiting its fiscal space. This significant allocation, analysts believe is crucial to maintaining creditor confidence and avoiding defaults but leaves less room for developmental expenditures.
2. Compensation of Employees: Closely following Interest payment is the Compensation of employees with an amount of GHC 16.46 billion representing 24.16%. This shows a significant portion of the budget will go to public sector salaries, ensuring the government workforce is maintained. This also underscores the huge wage bill of the government.
3. Grants to Other Government Units: An amount of GHC 9.19 billion was apportioned to this item representing 13.46%. This funding will support decentralized governance and public services.
Source: Author generated
4. Other Expenditure: This item that deals with the broad category of miscellaneous operational cost was allocated an amount of GHC 4.63 billion representing 6.79% in the 2025 mini-budget.
5. Goods and Services: An amount of GHC 3.12 billion was allocated for goods and services which ensures government operations including procurement of essential goods and services run smoothly. This item took a share of 4.58%.
6. Arrears Clearance: This expenditure item deals with the clearing of arrears of commitments in the past. This is normally paid to contractors and service providers. The next government will spend an estimated amount of GHC 2.34 billion representing 3.44% of the entire allocation.
7. Amortization: This allocation is aimed at addressing the principal of debt repayments. An amount of GHC 1.28 billion representing 1.88% has been allocated for this purpose.
8. Capital Expenditure: Ghanaians should not expect any massive infrastructural development in the first quarter of the year as a very small amount was set aside for capital expenditure. Just GHC 592 million representing 0.87% was apportioned for this purpose.
9. Subsidies: GHC 495.07 million was aside for subsidies representing just 0.73%.
10. Social Benefits: An amount of GHC 324.20 million representing 0.48% was allocated to support the vulnerable groups in the country.
The 2025 mini-budget reflects a heavy tilt towards recurrent expenditures, with debt servicing (interest payments and amortization) and compensation of employees consuming over 56% of the total allocation. Capital investment, a key driver of long-term growth, receives less than 1% of the budget while support for the vulnerable groups also receives below 1%.
While the 2025 mini-budget ensures government functions continue uninterrupted, the heavy reliance on debt servicing limits resources for development and social interventions.
