By Lord Fiifi Quayle, July 2025

Ghana’s economic recovery has gained significant momentum in 2025, offering valuable insights for preventing economic failure in developing countries. With fresh data from the first half of 2025, Ghana’s experience provides an updated roadmap for economic stabilization and sustainable growth across Africa.

Ghana’s Economic Performance in 2025: Strong Recovery Momentum

Ghana’s economy has demonstrated remarkable resilience in 2025, with GDP growth reaching 5.3% year-on-year in the first quarter, significantly outperforming the 4.9% recorded in Q1 2024 Business Insider Africa. This performance has exceeded initial forecasts that estimated GDP growth between 4.5% and 4.8% for the year, with analysts now suggesting full-year 2025 growth could surpass the upper-band forecast of 4.8%.

The most encouraging aspect of Ghana’s 2025 performance has been the strength of the non-oil sector, which recorded a robust 6.8% year-on-year growth in Q1 2025, despite a contraction in the oil and gas sector during the same period. This reflects strong underlying momentum in the real economy and has significantly boosted optimism about Ghana’s growth outlook for 2025, despite downside risks from fiscal tightening Business Insider Africa.

However, significant gains were made as of May 2025. Inflation was down at 18.4% year-on-year as of April 2025, with monthly inflation at 0.8% Bank of Ghana. The monetary policy rate remains high at 28.00%, with average lending rates at 31.25%, reflecting the Bank of Ghana’s continued efforts to combat inflation and maintain macroeconomic stability.

Luckily the exchange rate began to appreciate 24.1% year-to-date against the US dollar as of May 2025, reaching GHS 11.85 per dollar Bank of Ghana. With a gross international reserves standing at USD 6.6 billion as of April 2025, providing 3 months of import cover.

Major Milestones in Ghana’s Recovery Program

IMF Program Success and Fiscal Consolidation

Ghana achieved a crucial milestone in July 2025 when the IMF Executive Board completed the fourth review of its 36-month Extended Credit Facility arrangement, allowing for an immediate disbursement of approximately $367 million Reuters. This brings Ghana’s total IMF disbursements to significant levels, demonstrating the country’s commitment to its reform program despite challenges.

The government has passed a 2025 budget consistent with the IMF program’s objectives and enacted an enhanced fiscal responsibility framework, including new rules to tighten expenditure commitments IMF. The fiscal deficit for 2025 is projected at 3.1% of GDP, with a primary surplus target of 1.5%, representing a significant improvement from previous years World Bank.

Debt Restructuring Progress

A landmark achievement in 2025 was Ghana’s parliament approval in June of a $2.8 billion debt restructuring deal with 25 creditor nations, including China, France, the United States, Germany, and the United Kingdom Reuters. This deal provides debt service relief of $2.8 billion during the IMF-supported program period (2023-2026), with debt service payments due between December 2022 and December 2026 being rescheduled and repaid from 2039 to 2043.

Under the restructuring terms, interest rates are set at 1% to 3% to capitalize rescheduled amounts, depending on the original contractual rate, offering Ghana’s treasury significant savings below market levels. As of March 2025, total public debt stood at GHC 683.1 billion (USD 53.1 billion), representing 58.1% of GDP Bank of Ghana.

Fitch Ratings has expressed optimism about Ghana’s debt restructuring process, expecting the country to fully complete external debt restructuring by the end of 2025 CNBC Africa. The rating agency upgraded Ghana to B- with a stable outlook, forecasting real GDP growth of around 4% and expecting inflation to decrease to an average of 15% in 2025.

Africa’s Economic Outlook 2025: Context for Ghana’s Recovery

Ghana’s recovery is occurring within a broader context of African economic resilience. According to the African Development Bank’s 2025 African Economic Outlook, Africa’s economy is projected to grow from 3.3% in 2024 to 3.9% in 2025, reaching 4.0% in 2026, outpacing global averages African Development Bank.

The continent’s growth is being driven by effective domestic reforms and improved macroeconomic management, with 21 African countries expected to achieve growth exceeding 5% in 2025. Four countries—Ethiopia, Niger, Rwanda, and Senegal—are potentially reaching the critical 7% threshold required for poverty reduction and inclusive growth.

Regional performance varies significantly across Africa in 2025. East Africa leads with projected 5.9% growth in 2025-2026, driven by resilience in Ethiopia, Rwanda, and Tanzania. West Africa maintains solid 4.3% growth, while North Africa is expected to register 3.6% growth. Central Africa’s growth is projected to slow to 3.2%, and Southern Africa will grow at only 2.2%, with South Africa expected to achieve only 0.8% growth African Development Bank.

However, significant challenges persist across the continent. Fifteen countries are experiencing double-digit inflation, while interest payments now consume 27.5% of government revenue across Africa, up from 19% in 2019. The continent also faces massive capital outflows, with approximately $587 billion in outflows including $90 billion in illicit flows, $275 billion in profit shifting, and $148 billion in corruption losses.

Sectoral Performance and Diversification Progress

Strong Non-Oil Sector Performance

Ghana’s 2025 economic performance has been particularly impressive in the non-oil sector, which has demonstrated the importance of economic diversification. Key sectors contributing to Q1 2025 growth include:

• Fishing: 16.6% growth
• Information and Communication Technology (ICT): 13.1% growth
• Finance and Insurance: 9.3% growth
• Transport and Storage: 8.6% growth
• Trade: 7.1% growth
• Crops and Cocoa: 6.7% growth
• Manufacturing: 6.6% growth

Business Insider Africa

Agricultural Sector Recovery

The agriculture sector posted a remarkable 6.6% growth in Q1 2025, driven mainly by a 6.7% increase in the high-weight crops sub-sector. This performance has been a contributing factor to the consistent decline in annual food inflation since February 2025, though the sector has yet to fully reflect the government’s ongoing investments in agriculture aimed at supporting lower food inflation.

Manufacturing and Services Resilience

The manufacturing sector’s 6.6% growth in Q1 2025 demonstrates the potential for industrial development, while the strong performance in ICT (13.1%) and finance and insurance (9.3%) sectors reflects Ghana’s progress in developing higher-value service industries. These sectors are crucial for long-term economic diversification and job creation.

Lessons from Africa’s Top Performers in 2025

Rwanda’s Continued Excellence

Rwanda continues to demonstrate exceptional economic performance, maintaining its position as one of Africa’s top-performing economies. The country is among the four expected to exceed 7% growth in 2025, building on its track record of averaging over 7% GDP growth annually over the past two decades African Development Bank.

Rwanda’s success continues to rest on strong political leadership, consistent policy implementation, and strategic investments in human capital and infrastructure. The country’s approach to structural transformation through its National Strategy for Transformation (NST-2) provides a model for other African countries seeking to achieve middle-income status.

Ethiopia’s Diversification Drive

Ethiopia’s inclusion among the top four performers expected to exceed 7% growth in 2025 reflects the country’s commitment to economic diversification and manufacturing development. The country’s homegrown economic reform program prioritizes manufacturing sector growth as a key pillar of economic transformation.

Ethiopia’s focus on expanding its manufacturing base while maintaining agricultural productivity demonstrates the potential for successful structural transformation in Africa. The country’s experience illustrates how strategic industrial policy can support diversification away from traditional agricultural dependence.

Senegal’s Oil and Gas Success

Senegal’s emergence as a top performer in 2025 is largely driven by new oil and gas production coming onstream. The country’s ability to manage its newfound energy resources while maintaining economic stability provides valuable lessons for other African countries discovering natural resources.

Senegal’s approach emphasizes the importance of proper institutional frameworks and transparent governance in managing natural resource wealth. The country’s experience demonstrates how new resource discoveries can be leveraged to support broader economic development when properly managed.

Updated Policy Recommendations for Sustainable Growth

Fiscal Consolidation with Growth-Friendly Measures

Ghana’s 2025 experience demonstrates the importance of balancing fiscal consolidation with growth-supportive policies. The country’s ability to achieve a primary surplus target of 1.5% of GDP while maintaining positive economic growth shows that fiscal discipline need not come at the expense of economic expansion when properly implemented.

Key elements of Ghana’s approach include:

Monetary Policy Coordination

1. Enhanced Fiscal Responsibility Framework: The enactment of strengthened fiscal rules and expenditure controls provides a foundation for sustainable public finances while maintaining investor confidence.
2. Revenue Optimization: Focus on improving tax collection and broadening the tax base rather than relying solely on expenditure cuts, which can undermine growth prospects.
3. Strategic Public Investment: Continued investment in infrastructure and human capital that supports long-term productivity growth while maintaining fiscal discipline.

Ghana’s monetary policy approach in 2025 demonstrates the importance of coordinated macroeconomic management. The Bank of Ghana’s maintenance of a high monetary policy rate (29.00%) while supporting economic recovery shows the delicate balance required between price stability and growth objectives.

The elimination of monetary financing of the budget has been crucial in restoring credibility and supporting disinflation efforts. Other African countries can learn from Ghana’s experience in rebuilding central bank independence and credibility after periods of fiscal dominance.

Exchange Rate Management

Ghana’s experience with exchange rate pressures in 2025 highlights the ongoing challenges facing African economies. The 5.3% year-to-date depreciation of the cedi against the US dollar as of March 31,2025 though steady demonstrates the vulnerability of African currencies to external shocks and capital flow reversals.

Successful exchange rate management requires:

1. Adequate Reserve Buffers: Maintaining sufficient foreign exchange reserves to weather external shocks
2. Flexible Exchange Rate Systems: Allowing currencies to adjust to external pressures while avoiding excessive volatility
3. Supporting Policies: Implementing fiscal and monetary policies that support currency stability

Debt Management and Restructuring

Ghana’s 2025 debt restructuring experience provides a template for other African countries facing debt sustainability challenges. The successful completion of the official creditor restructuring demonstrates the importance of:

1. Comprehensive Approach: Addressing both domestic and external debt in a coordinated manner
2. Multilateral Support: Working with international financial institutions to provide credible reform programs
3. Stakeholder Engagement: Maintaining dialogue with creditors and civil society throughout the process
4. Legislative Approval: Ensuring democratic oversight and approval of restructuring agreements

Challenges and Risks for 2025-2026

Inflation Persistence

Despite progress in many areas, Ghana’s inflation rate of 18.4% as of April 2025 remains well above target levels. The persistence of high inflation poses risks to:

• Real income growth and poverty reduction
• Investment decisions and business planning
• Exchange rate stability
• Monetary policy effectiveness

Addressing inflation requires continued tight monetary policy coordination with fiscal consolidation and structural reforms to improve supply-side constraints.

External Vulnerabilities

Ghana’s continued dependence on commodity exports and vulnerability to external shocks remain significant challenges. The country’s current account performance, while improved, remains susceptible to:

• Commodity price volatility
• Global economic conditions
• Capital flow reversals
• Exchange rate pressures

Implementation Capacity

The success of Ghana’s reform program depends critically on implementation capacity. Key challenges include:

• Maintaining reform momentum across political cycles
• Building technical capacity for policy implementation
• Ensuring coordination across government agencies
• Managing social and political pressures from adjustment costs

Regional Integration and Trade Opportunities

AfCFTA Implementation

The African Continental Free Trade Agreement (AfCFTA) presents significant opportunities for Ghana and other African countries to expand their economic base through regional integration. Ghana’s recovery in 2025 positions the country to take advantage of expanded regional trade opportunities.

Key benefits from AfCFTA implementation include:

1. Market Access: Expanded access to regional markets for Ghanaian goods and services
2. Industrial Development: Opportunities for value-added manufacturing for regional markets
3. Investment Flows: Increased intra-African investment and technology transfer
4. Economies of Scale: Ability to achieve scale economies in smaller domestic markets

Infrastructure Development

Ghana’s infrastructure investments, particularly in transportation and energy, are crucial for supporting both domestic growth and regional integration. The country’s experience demonstrates the importance of:

1. Strategic Infrastructure Investment: Focusing on projects that enhance productivity and competitiveness
2. Regional Connectivity: Developing infrastructure that supports regional trade and integration
3. Private Sector Participation: Leveraging private sector resources and expertise for infrastructure development
4. Sustainable Financing: Ensuring infrastructure investments are financially sustainable and contribute to long-term growth

Technology and Innovation for Economic Transformation

Digital Economy Development

Ghana’s strong ICT sector performance (13.1% growth in Q1 2025) highlights the potential for digital economy development in Africa. The sector’s growth demonstrates the importance of:

1. Digital Infrastructure: Investing in broadband and mobile infrastructure
2. Digital Skills: Developing human capital for the digital economy
3. Regulatory Framework: Creating supportive regulatory environments for digital innovation
4. Financial Inclusion: Leveraging digital technologies for financial inclusion and economic participation

Innovation Ecosystems

Developing innovation ecosystems is crucial for long-term economic transformation. Ghana’s experience suggests the importance of:

1. Education and Research: Investing in higher education and research capabilities
2. Public-Private Partnerships: Fostering collaboration between government, universities, and private sector
3. Entrepreneurship Support: Providing support for startup development and entrepreneurship
4. Technology Transfer: Facilitating technology transfer and knowledge sharing

Environmental Sustainability and Climate Resilience

Green Growth Strategies

Ghana’s recovery program increasingly incorporates environmental sustainability considerations. The country’s experience demonstrates the importance of:

1. Climate-Resilient Infrastructure: Investing in infrastructure that can withstand climate shocks
2. Sustainable Agriculture: Promoting climate-smart agricultural practices
3. Renewable Energy: Diversifying energy sources to reduce dependence on fossil fuels
4. Environmental Regulation: Implementing and enforcing environmental standards

Climate Finance

Access to climate finance is crucial for supporting sustainable development in Africa. Ghana’s experience highlights the need for:

1. Climate Policy Framework: Developing comprehensive climate policies and strategies
2. International Cooperation: Engaging with international climate finance mechanisms
3. Private Sector Engagement: Leveraging private sector investment in climate solutions
4. Capacity Building: Developing technical capacity for climate finance and project management

Conclusion: A Roadmap for African Economic Success

Ghana’s economic recovery in 2025 provides a compelling case study for avoiding economic failure and achieving sustainable growth in Africa. The country’s experience demonstrates that with appropriate policies, international support, and sustained commitment to reform, even countries facing severe economic crises can achieve remarkable turnarounds.

The key lessons from Ghana’s experience include:

1. Comprehensive Reform Programs: Successful economic stabilization requires coordinated fiscal, monetary, and structural reforms
2. International Partnership: Collaboration with international financial institutions and development partners is crucial for credibility and financing
3. Debt Sustainability: Proactive debt management and restructuring are essential for maintaining fiscal space
4. Economic Diversification: Reducing dependence on commodities through diversification is crucial for long-term resilience
5. Institutional Strength: Building strong institutions and governance systems is fundamental for sustainable development

As Ghana continues its recovery journey, the country’s experience offers hope and practical guidance for other African nations facing similar challenges. The continent’s projected growth of 3.9% in 2025, with 21 countries expected to achieve growth exceeding 5%, demonstrates the potential for widespread economic transformation across Africa.

The success of Ghana’s program, combined with strong performances in countries like Rwanda, Ethiopia, and Senegal, shows that economic failure is not inevitable in Africa. With appropriate policies, strong institutions, and sustained commitment to reform, African countries can build resilient economies capable of delivering sustained improvements in living standards for their populations.

The path forward requires continued focus on fiscal responsibility, monetary stability, structural transformation, and regional integration. Most importantly, it requires sustained political commitment to reform and the development of institutional capacity to implement and maintain sound economic policies over time.

Ghana’s journey from economic crisis to recovery in 2025 serves as both an inspiration and a practical guide for African countries seeking to avoid economic failure and build prosperous, resilient economies for their people. The lessons learned from this experience will be invaluable for shaping Africa’s economic future in the years ahead.

GHANA MUST WORK AGAIN