Ms. Gifty Annor-Sika Asantewah, a Financial Market Analyst and the President of Women In Forex Ghana, reacting to the recent approval of Ghana’s GH₵68.13 billion budget for the first quarter of 2025 in an interview with the Vaultz News indicated that marks a significant step in addressing the economic challenges facing the country and shaping the local bourse.
According to the analyst, after initial delays, Parliament’s decision to approve the budget provides much-needed clarity for the government and the private sector. “This development is set to influence key economic indicators, particularly the stock market and foreign direct investment (FDI) flows,” she stated.
“The stock market, often viewed as a barometer of economic confidence, is likely to respond positively to the approval of the Q1 budget. The initial delays in its passage had created uncertainty, dampening investor sentiment. With the budget now in place, a sense of stability has returned, encouraging investors to re-engage with the market.”
Ms. Gifty Annor-Sika Asantewah
Ms Annor-Sika noted that sectors directly linked to government spending are poised to benefit the most.
“For instance, banks, which hold a significant portion of government debt, stand to gain from the GH₵20.69 billion allocated for interest payments. Improved liquidity in these institutions can enhance their capacity to extend credit, further stimulating economic growth. Similarly, infrastructure and consumer-focused sectors are expected to experience increased activity due to grants, subsidies, and social benefits.”
Ms. Gifty Annor-Sika Asantewah
Moreover, she noted that the budget’s focus on clearing arrears addresses a longstanding challenge for businesses reliant on government contracts. “Timely payments can strengthen the financial positions of these companies, improving their performance and, consequently, their stock valuations.”
A Boost to Foreign Direct Investment
Foreign direct investment (FDI) plays a crucial role in Ghana’s economic development, and the Ms Annor-Sika stated that approval of the Q1 budget sends a strong signal to international investors. The government’s clear expenditure plan reflects a commitment to economic stability, a key consideration for foreign investors, she added.
In addition, she observed that the focus on addressing arrears and amortisation is particularly appealing to international stakeholders, as it demonstrates the government’s intent to honor its financial obligations. This reduces the perceived risk of doing business in Ghana, making the country a more attractive destination for FDI.
“Additionally, the budget creates opportunities for public-private partnerships (PPPs) in sectors such as infrastructure, energy, and agriculture. The emphasis on grants and subsidies provides an incentive for investors to collaborate with the government on projects that align with Ghana’s developmental goals. This approach not only attracts foreign capital but also enhances the efficiency and impact of government initiatives.”
Ms. Gifty Annor-Sika Asantewah
Circumnavigating Potential Challenges
Ms Annor-Sika noted that while the budget offers numerous opportunities, it also presents challenges that could affect its impact on the stock market and FDI trends. Chief among these she said is Ghana’s high debt burden, with interest payments consuming a significant portion of the budget. “This raises questions about the country’s debt sustainability, which could deter long-term investment.”
“Inflationary pressures are another concern, as increased government spending has the potential to drive up prices. Rising inflation erodes investment returns, particularly in fixed-income securities, and could lead to caution among both domestic and foreign investors.”
Ms. Gifty Annor-Sika Asantewah
The analyst averred that global economic conditions also play a role. With interest rates rising in developed markets, Ghana may face competition for foreign capital, despite its improved fiscal outlook.
It can be recalled that Members of Parliament (MPs) approved a total of GH₵68,134,674,527 for the first quarter of 2025. The funds are to be allocated across various sectors of the economy between January and March this year.
According to the mini-budget 2025, the new John Mahama administration plans to spend GH₵16,462,828,490 on compensation for employees. Expenditure on goods and services is set at GH₵3,123,221,785, while interest payments will cost the nation GH₵20,691,523,500.
Other expenditures include GH₵45,507,080 for subsidies, GH₵9,193,773,211 for grants to other government units, and GH₵234,703,983 for social benefits. Additionally, other government expenditures are expected to amount to GH₵5,293,248,499.
By addressing critical financial obligations and outlining clear priorities, the budget provides a foundation for stability and growth. Its impact on the stock market and FDI trends is expected to be largely positive, fostering renewed confidence among investors.
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