The finance minister, Dr. Mohammed Amin Adam, has requested a sum of GH¢68.1 billion to fund essential government operations from January to March 2025.
This was contained in the Expenditure in Advance of Appropriation or mini-budget as presented to Parliament last week despite delays.
This mini-budget is designed to ensure the uninterrupted functioning of government services during the first quarter of the year, bridging the financial gap until the incoming administration presents a full-year budget.
The proposed allocation will cover critical areas such as public sector salaries, statutory obligations, infrastructure maintenance, and social intervention programs.
Dr. Amin Adam’s submission fulfils constitutional requirements aimed at preventing fiscal disruptions during political transitions.
Second Deputy Speaker of Parliament, Andrew Asiamah Amoako, has referred the proposal to the Budget and Finance Committees for review.
These committees will analyze the figures and accompanying policies before presenting their report to the House for debate and approval.
The mini-budget’s approval is crucial to maintaining continuity in governance and public service delivery during the transitional period.
The 2025 Mini-Budget as presented to the outgoing eighth parliament has allocated GHC20 billion for interest payments, including obligations to Independent Power Producers (IPPs) and the Energy Sector Levy Account (ESLA).
This was disclosed by the Chairman of the Finance Committee, Patrick Boamah, during the debate and approval of the delayed 2025 mini-budget.
“The Committee noted that projections in respect of interest payments amounted to GHC20,691,523,500.00. The amount includes payments to the Energy Sector Levy Account (ESLA) and Independent Power Producers (IPPs),” Hon Boamah disclosed.
However, the Finance Minister, Dr. Mohammed Amin Adam, has assured the Joint Committee on Budget and Finance that the delay would not adversely impact government operations.
He emphasized that measures were in place to guarantee the smooth functioning of public services during the transitional period.
This development follows Parliament’s approval of the 2025 Mini-Budget, amounting to GHC68.13 billion. The budget is intended to cover government operations for the first quarter of 2025, pending the presentation of a comprehensive budget by the incoming Mahama administration.
The approved expenditure also projects total revenue and grants for the first quarter of 2025 at GHC42.54 billion, representing 3.5% of Ghana’s GDP.
Parliament’s approval came after extensive deliberations and scrutiny at the Finance Committee level. The discussions highlighted key concerns, including debt management, revenue mobilization, and the government’s fiscal consolidation efforts.
The 2025 Mini-Budget represents a crucial tool to stabilize the economy and sustain critical services during a politically transitional period.
The Electricity Company of Ghana (ECG) has assured the public of uninterrupted power supply following successful negotiations with Independent Power Producers (IPPs) to address outstanding arrears.
This assurance comes after the IPPs threatened to shut down multiple power plants due to unpaid debts, sparking fears of a potential return to widespread power outages, locally known as “dumsor.”
Speaking to the media, ECG’s External Communications Manager, Nii Ayiku Ayiku, confirmed that recent negotiations had averted the anticipated crisis.
“The Acting Managing Director has assured us that we are fully engaged with the IPPs to prevent any recurrence of the outages experienced over the weekend.
We are confident that everything is on track,” he stated.
According to reports, the government has reached a temporary agreement with the IPPs, paying off part of the debt and establishing a payment plan to settle the remaining balance.
This arrangement is expected to stabilize electricity generation and ease tensions within the energy sector.
While ECG has committed to maintaining a consistent power supply, industry stakeholders have called on the government to implement a sustainable financial framework to prevent similar disputes in the future and ensure the long-term reliability of Ghana’s energy supply.
In similar news, Sunon Asogli Power Ghana Limited has indicated it has resumed operation of its 560MW power plant, thanking the Vice President, Dr Mahamudu Bawumia, the Minister of Finance, Dr Mohammed Amin Adam, and the Minister of Energy, Herbert Krapa, for spearheading the release of “an emergency funding to address our critical financial need”.
Ghana’s largest Independent Power Producer (IPP), Sunon Asogli Power Ghana Limited, halted operations for more than a month protesting the national power distributer, Electricity Company of Ghana (ECG), owing it to the tune of USD259 million.
Sunon Asogli’s protest reduced power generation, resulting in load-shedding or dumsor by ECG as several places across the nation experienced power outages between 6 PM and midnight almost every week.
In its November 25 statement, Sunon Asogli said, “We wish to express our sincere appreciation to the Minister for Finance, Hon Mohammed Amin Adam, and the Minister for Energy, Hon Herbert Krapa, for their intervention, to release an emergency funding to address our critical financial need. We have returned to operations today, Monday, November 25, 2024, at 3 PM.”
“We have submitted our final version of the Restructuring Terms Sheet to the Ministry of Finance and Electricity Company of Ghana (ECG) in August, for finalisation and signing soon. We are confident that a win-win solution that will ensure the stability and reliability of Ghana’s energy sector will be achieved.”
The statement said, “We hope the Electricity Company of Ghana (ECG) can adhere to the spirit of the contract and diligently honor their financial obligations in the PPA.
“We would like to commend H.E. the Vice President [Mahamudu Bawumia], for his intervention in ensuring the payment to us for our return to operation.”
“We deeply regret the impact of our shutdown,” the statement signed by Chairman Qun Yang ended.
Finance Minister, Dr Mohammed Amin Adam, has reaffirmed that Ghana’s economy has come back to life following the difficulties faced in the last three years.
He said macroeconomic stability is fast returning to our country
The Karaga lawmaker said this while speaking at a rally in Saboba in the Northern Region last week.
“Ghana’s economy has come back to life following the difficulties we faced in the last three years. Macroeconomic stability is fast returning to our country. We all can see the indicators improving by the day.
“And now we want to focus on growth, economic growth, which has also already demonstrated that the economy has recovered strongly. Last year, we were supposed to grow at 1.5 percent, but we grew at 2.9 percent. Half this year, we were supposed to grow at 3.1 percent, but we grew at 5.8 percent.”
President Akufo-Addo also made similar comments last week that the economy is recovering.
President Akufo-Addo said on Wednesday, 20th November 2024, when he commissioned The Bank Square, the new headquarters of the Bank of Ghana, located in the heart of Accra that “Recent data from the Bank of Ghana shows that Ghana’s economy is firmly on the path of recovery. Provisional GDP growth of 6.9% in the second quarter of 2024, with a robust non-oil growth of 7.0%, highlights the strength of our agriculture, industry, and services sectors.
“Inflation has been sharply reduced from 54.1% in 2022 to 22.1% as of October 2024, bringing relief to households and businesses alike. These achievements are further bolstered by a trade surplus of $2.78 billion and international reserves of $7.5 billion, which provide a strong buffer against external shocks,” he said.
He added “This milestone is a testament to the Bank of Ghana’s commitment to sound monetary policies under the leadership of Governor Ernest Addison and his dedicated team. I applaud their efforts, as well as the creativity and expertise of the architects, engineers, and contractors—especially GoldKey Properties, a wholly Ghanaian entity—that brought this vision to life. Together, we are building a foundation for a resilient economy, inclusive growth, and a brighter future for all Ghanaians.
“As we celebrate this achievement, I call on all of us to continue working together to build an economy that is stable, inclusive, and prosperous. The Bank Square is not just a symbol of what we have accomplished; it is an inspiration for what lies ahead. Let us remain united in our efforts to make Ghana great and strong!”
The Government of Ghana says successful implementation of the Domestic Debt Exchange Programme (DDEP) has saved the country a remarkable $12 billion.
Highlighting that, the DDEP played a crucial role in alleviating Ghana’s financial difficulties and reducing its debt burden, creating a more sustainable fiscal environment.
The DDEP, launched in December 2022, was a key element of Ghana’s broader debt restructuring efforts. The programme required domestic bondholders to exchange their existing bonds for new ones under different terms, reducing the government’s debt servicing obligations.
“The DDEP was a great success, and it paved the way for the restructuring of our bilateral debt, which also saw significant success,” Ghana’s Finance Minister, Dr. Mohammed Amin Adam, has revealed during a panel discussion at the 2024 Annual Meetings of the International Monetary Fund (IMF) and World Bank Group, last week.
“… government saved $2.8 billion from bilateral debt restructuring.”
According to government data, Ghana has successfully restructured $13 billion in Eurobonds, concluding the process in early October. This resulted in an outright debt cancellation of about $5 billion and debt service relief of $4.3 billion, bringing total savings to approximately $12 billion.
“We still have an ongoing restructuring process with our commercial creditors involving about $2.7 billion, and we are working hard to conclude that,” he added.
Dr. Adam emphasised that the DDEP was an essential policy measure, laying the foundation for these wider debt relief efforts, which have significantly improved Ghana’s fiscal health.
Against the norm, the finance minister has indicated that, government is not seeking additional budget support in a midyear review.
This comes as the new finance minister has assured Ghanaians of fiscal prudence despite electioneering year.
Presenting the midyear budget review to Parliament, last week, the minister assured that the government is operating within its budget, emphasizing efforts to control expenditures and stay within the 2024 Budget Appropriation.
“We are not seeking supplementary funds in this mid-year review. We are determined to be more efficient, strategic, and intentional to entrench fiscal consolidation and strongly promote growth”, Dr. Mohammed Amin Adam declared government’s commitment fiscal responsibility.
Consequently, the minister noted that government had exceeded its midyear revenue target by 0.2 percent as of the end of June 2024 while highlighting several key financial milestones.
“In effect, Mr. Speaker, we are living within our means. Indeed, consistent with our programme with the IMF, we are on course to achieving a primary surplus of 0.5 percent of GDP by the end of the year.
“We have successfully concluded the second review of our Extended Credit Facility with the International Monetary Fund (IMF), which led to the disbursement of the third tranche of 360 million US Dollars, bringing total disbursement to about USD1.6 billion.
“We have completed the Debt Restructuring programme with the Official Creditor Committee (OCC), covering USD5.1 billion dollars, resulting in approximately 2.8 billion US Dollars of debt relief. This means that we will not service our debt to our official creditors from 2023 to 2026.”
Dr. Amin Adam further announced the successful conclusion of negotiations with Eurobond holders, securing 13.1 billion US Dollars.
“This will lead to a cancellation of 4.7 billion US Dollars of our debt and provide debt service relief of 4.4 billion US Dollars between 2023 and 2026,” he explained.
He also highlighted savings from renegotiated Purchasing Power Agreements (PPAs) with Independent Power Producers, expected to save Ghana USD6.6 billion over the lifetime of the agreements.
“We have concluded negotiations with five of the seven Independent Power Producers, leading to substantial savings,” he said.
Dr. Amin Adam also revealed that the government has cleared all outstanding Bank Transfer Advice (BTAs) up to 2022 and is working diligently to address BTAs from 2023.
All things being equal, the finance minister is to present the 2024 Mid-Year Budget Review to Parliament tomorrow, Tuesday, 23 July 2024.
This presentation will provide updates on the implementation of the 2024 Budget and insights into the country’s economic and fiscal performance for the first half of the year.
“The budget review is necessary for introduction of new measures to rejuvenate the economy”, Dr. Mohammed Amin Adam, the Minister for Finance, has said.
Majority Chief Whip Frank Annoh-Dompreh announced the upcoming presentation while presenting the Business Statement for the week to the House.
“Hon members, the Minister of Finance is expected to present the Mid-Year Review of the Budget Statement on Economic Policy of the government for the 2024 financial year on Tuesday, July 23,” he stated.
This mid-year review is highly anticipated as it will shed light on the government’s progress in executing its economic policies and managing fiscal resources.
It will also outline any necessary adjustments to ensure the country’s financial stability and growth for the remainder of the year.
Already, Ghana’s economy is being touted by the World Bank in its latest Country Policy and Institutional Assessment (CPIA) report and the Moody’s, and international rating agency.
Moody’s recently hinted that Ghana’s economy is likely to witness credit ratings upgrade after it successfully restructured its Eurobonds.
Currently, Ghana’s rating stands at Caa3 for local currency and Ca for foreign currency. These ratings reflect the government’s ongoing debt restructuring efforts under the G20 common framework, initiated in December 2022.
Moody’s, in a recent report stated that, once the restructuring is complete, all ratings are likely to be aligned at a higher level, though still within the Caa-rating category due to liquidity constraints typically following a default event. The IMF program supports fiscal consolidation and funding access, benefiting from Ghana’s relatively robust institutional capacity.
“..However, high inflation and tight monetary conditions remain key credit challenges”, New York-based ratings agency has said.
The restructuring of local currency debt, excluding Treasury Bills, was completed in 2023. Regarding foreign currency debt, which constitutes nearly half of Ghana’s total debt, significant progress has been made.
Last month, Ghana’s Ministry of Finance announced an agreement in principle with bondholders to restructure $13.1 billion of Eurobond debt, which accounted for 21% of Ghana’s total debt in 2023. Under this agreement, bondholders would forgo around $4.7 billion in principal without state-contingent triggers. This followed a June 12 MoU between the Finance Ministry and the Official Creditor Committee (OCC) to restructure $5.4 billion of official sector external debt. The IMF confirmed on June 28 that both restructurings are consistent with its program parameters, though the OCC has yet to confirm that the bondholder agreement is comparable in debt treatment to the MoU.
Moody’s assesses Ghana’s economic strength at ‘ba2’, balancing the country’s growth potential in the oil and non-oil sectors against its small size and low wealth levels. The ‘caa2’ rating for institutions and governance strength reflects very weak fiscal and monetary policy effectiveness, which led to unsustainable government debt and the need for restructuring.
Ghana’s fiscal strength is rated ‘ca’, indicating very weak debt affordability and a very high debt burden. The ongoing debt restructuring is expected to improve these metrics. Moody’s also highlighted Ghana’s susceptibility to event risk at ‘ca’, driven by elevated government liquidity risk due to high gross borrowing requirements and limited borrowing options.
The outlook for Ghana remains stable, reflecting the ongoing foreign currency debt restructuring. Expected losses for bondholders align with the current ratings’ loss-given-default range. Moody’s indicated that a rating downgrade is unlikely, given the recent progress on foreign currency debt restructuring and the agreement’s terms with bondholders.
However, if the agreement does not proceed, it could derail the debt restructuring process, potentially leading to downward pressure on both local and foreign currency ratings. Moody’s emphasized that they will likely upgrade the local and foreign currency ratings following the exchange of the Eurobonds.
The June 24 agreement provides substantial debt relief to the government, complementing earlier local currency debt restructuring. The restructuring of official sector debt will bring additional, yet unknown, liquidity relief. Post-restructuring, Ghana’s ratings are likely to be higher, though still reflecting liquidity constraints.
