The Institute of Economic Affairs (IEA) has raised concerns about the 2025 Budget’s strong focus on social interventions, warning that while these programs offer immediate benefits, they could also pose long-term economic risks. The IEA argues that while investing in social welfare can promote equity, prioritizing it over productive investments might lead to a smaller national income in the future. The budget retains existing social programs such as free Senior High School education, free nursing and teacher training allowances, and the Livelihood Empowerment Against Poverty (LEAP) initiative. Additionally, new initiatives such as free first-year university fees, free primary healthcare, and free sanitary pads for schoolgirls have been proposed, expanding the government's social intervention efforts.
Despite acknowledging the positive impact of these programs on citizens' well-being, the IEA warns that they place a heavy financial burden on the national budget, limiting funds available for economic investments. The institute highlights that a significant portion of government spending is allocated to employee compensation and social benefits, leaving little room for infrastructure, industrial development, and other growth-focused initiatives. According to the IEA, excessive reliance on government-funded social interventions may slow down economic expansion and weaken the country’s ability to generate sustainable revenue in the long run. It suggests that a more balanced approach, where investments in productive sectors are prioritized alongside social programs, would yield better economic outcomes.
The IEA’s warning underscores the need for the government to carefully assess the sustainability of its budgetary commitments. While social interventions can uplift vulnerable populations and improve access to essential services, they must be backed by strong revenue streams and economic growth strategies to remain viable. As Ghana moves forward with its 2025 Budget implementation, policymakers may need to consider ways to increase investment spending while ensuring that social welfare programs do not compromise the country’s long-term financial stability. Balancing immediate social needs with future economic growth will be key to ensuring that the budget supports both social equity and national prosperity.
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