Fitch Solutions has reported that fiscal consolidation efforts in Sub-Saharan Africa, including Ghana, are expected to gain momentum in 2025. The findings, outlined in the report titled “Sub-Saharan Africa Macro Key Themes for 2025: Stronger Headline Growth but Structural Vulnerabilities Exist”, suggest that while progress will be made, persistent structural challenges will continue to pose significant hurdles.

The report highlighted that fiscal slippages in 2024 were evident in major economies such as South Africa, Nigeria, and Ghana. These setbacks were partly attributed to increased election-related spending and public opposition to revenue-enhancing measures introduced by governments.

With elections concluded and a reduction in cost-of-living pressures, Fitch Solutions expects governments to adopt more focused fiscal consolidation strategies in 2025. However, the regional budget deficit, while projected to decrease from 4.3% of GDP in 2024 to 3.9% in 2025, will still surpass the pre-pandemic average of 3.2% recorded between 2010 and 2019.

The report also emphasized that 27 out of 49 Sub-Saharan African countries, including Nigeria, Ethiopia, Ghana, the Democratic Republic of Congo, Côte d’Ivoire, and Uganda, are likely to experience fiscal deficits higher than their respective 2010-2019 averages.

Monetary Policy Outlook

Fitch Solutions also anticipates that lower average inflation across the region will prompt central banks to begin or continue easing monetary policy, fostering greater alignment in monetary approaches across Sub-Saharan Africa. However, inflation in key markets like Nigeria and Ethiopia is expected to remain above the regional average of 11.4% recorded between 2014 and 2023 due to country-specific challenges

Source: TheDotNews