Ghana’s 2025 budget, unveiled by Finance Minister Dr. Cassiel Ato Forson, anticipates over $1 billion in oil revenue, predicated on a benchmark crude oil price of $74 per barrel. This projection is central to the government’s fiscal strategy, which includes a targeted GDP growth rate of at least 4.0%, a primary surplus of 1.5% of GDP, and a fiscal deficit of 3.1% of GDP.
However, recent global market trends challenge these assumptions. The World Bank forecasts Brent crude oil prices to average $64 per barrel in 2025, a significant drop from Ghana’s optimistic benchmark. This downward revision is attributed to anticipated slowing of global economic growth, increased oil supply, and reduced demand growth.
The discrepancy between Ghana’s projected oil revenue and the World Bank’s forecast raises concerns about potential revenue shortfalls. Such a gap could strain the government’s ability to meet its fiscal targets, potentially necessitating adjustments in expenditure or increased borrowing.
Moreover, this situation underscores the vulnerability of Ghana’s fiscal framework to external market fluctuations, emphasizing the need for diversified revenue sources and prudent fiscal management.
According to the World Bank, the outlook for global oil prices in 2025 and beyond is bleak. The forecast predicts that the price of Brent crude will continue to fall, with an anticipated average of just $64 per barrel in 2025, down from $81 in 2024. The price is expected to dip further to $60 per barrel by 2026, driven by slowing global economic activity, rising trade tensions, and uncertainty in the market.
This projection contrasts sharply with Ghana’s own assumptions, which rest on the more optimistic figure of $74 per barrel. The World Bank’s forecast is based on several key factors, including a slowdown in global oil demand growth to just 0.7 million barrels per day (mb/d) in both 2025 and 2026. Demand in key markets such as China, India, and Southeast Asia is expected to be adversely affected by economic fallout from rising trade tensions.
Additionally, the World Bank forecasts a sharp increase in global oil supply, expecting production to rise by 1.2 mb/d in 2025, driven by non-OPEC+ producers like Brazil, Canada, and Guyana. However, U.S. shale oil growth is expected to slow significantly due to lower oil prices and rising operational costs. This increased supply, combined with weaker demand, suggests that prices may not recover soon.
The World Bank also highlights the risks surrounding these projections. A more severe-than-expected global economic slowdown or a further escalation of trade tensions could push oil prices even lower, compounding the challenges facing countries reliant on oil exports. The ongoing adoption of electric vehicles (EVs) is also expected to further dampen long-term oil demand, especially in key markets like China.
For Ghana, this revised oil price forecast means that the government’s ambitious revenue expectations could fall significantly short. The $1 billion target in oil revenue, which forms the backbone of the 2025 fiscal plan, may not materialize at the levels anticipated.
Consequently, the government may be forced to either scale back spending, seek additional financing, or revise its fiscal deficit targets to accommodate this shortfall.
While the global oil market becomes increasingly volatile, Ghana’s fiscal strategy will need to adapt.
