They have therefore called on all stakeholders to be on guard and act as checks on the government to ensure that the economy does not return to where it started off two years ago.

They were of the view that at the end of election 2024, Ghana must be the winner.

The two Economists are Professor of Finance and Economics at the University of Ghana, Professor Godfred Bokpin, and Economist at the University of Ghana, Dr Patrick Assuming

Government in July 2022 officially approached the International Monetary Fund for an extended credit facility aimed at restoring macro-economic stability and debt sustainability.

Months after implementing the IMF programme, Ghana’s economy begun to see a turnaround characterised by declining inflation, relative currency stability, improvement of fiscal space and an improvement in gross international reserves.

GDP Growth rebounded strongly averaging 3.2 per cent in the first two quarters of 2023, inflation dropped to 26.2 per cent in December 2023, with the cedi also stabilising against the US dollar, depreciating by 6.4 per cent on cumulative basis between February and November 2023, compared to 53.9 per cent over same period in 2022.

Sacrifice from Ghanaians 

Speaking on the Graphic Business X Dialogue Series, Prof Bokpin, said the macro-economic stability being witnessed now was as a result of the sacrifice by all Ghanaians through the losses that were made during the DDEP and the introduction of some taxes.

He said the country’s external creditors were not spared either as the government in December 2022 took advantage of the debt service suspension clause under the G20 common Framework to suspend coupon payments on all external commercial debts and has since been engaging on a possible restructuring of debts of about $14 billion.

The government also recently reached an agreement with the Official Bilateral Creditor Committee co-chaired by France and China to restructure bilateral debt of $5.4 billion.

Prof Bokpin said with all these sacrifices being made to restore macro-economic stability, it would be unfortunate for the government to reverse all the gains for political gains.

“We have come a long way and we are now seeing stability but there are real risks going into the 2024 elections,” he stated.

He said all stakeholders must therefore serve as controls on government spending.

“One thing we all need to keep an eye on, which I think the IMF should also take notice is, if you monitor government activities in an election year solely through the central budgetary process, they will dribble you.

“So let’s watch the activities of state owned enterprises (SOEs) that act as the fiscal anchor for government to win elections. Maybe the central government may not spend, but we will see SOEs doing some spending and awarding some contracts solely to please the electorates,” he explained.

He said the country and the IMF must therefore adopt a general accounting approach to government spending in election years.

Stability was costly 

For his part, Dr Assuming said the stability that was achieved was very costly to businesses and households and measures must therefore be put in place to consolidate the gains.

He said 2024 had its own growth generating benefits but cautioned that the elections also represented a great risk, adding that he would bet that the government would surely overspend its budget.

“There will be a lot more spending due to how competitive the election will be and the tendency to overspend which has become the political business cycle will be there.

“You will think being under an IMF programme will prevent this but the same thing happened in 2016 so for me, it doesn’t matter the promises people make, the evidence shows that the incentive to overspend is high and our controls are so weak so I’m still betting that even though we are under IMF programme, we will overspend.

“I don’t think we will maintain the fiscal discipline, the issue is to what extent we will overspend,” he stated.

Election year slippages 

Elections in Ghana has been charatcterised with huge budget deficits and in 2004, despite the country just benefiting from the HIPC initiative which led to a total debt relief of US$3.5 billion, Ghana still recorded a budget deficit of 3.2 per cent of GDP against a target of 1.7 per cent.

In 2008, which was another election year, the budget deficit went into double digits and more than double of what was budgeted for, recording 11.5 per cent of GDP against a projection of four per cent.

The story was no different in 2012 as the country recorded a budget deficit of 12 per cent against a target of 6.7 per cent. In 2016, despite being under an IMF programme, the government still missed its budget deficit target.

The overall budget deficit on cash basis was the equivalent to 8.7 per cent of GDP against an IMF programme target of 5.3 per cent of GDP.  On commitment basis, the fiscal deficit was 10.3 per cent of GDP.

It will be recalled that prior to the 2016 elections, Ghana was under an IMF programme which started in April 2015 and had chalked up a lot of successes in the first year. However, the successes were all sacrificed in the 2016 election year, with the country recording a budget deficit of 8.7 per cent against a programme target of 5.3 per cent. This meant that the IMF programme which was expected to be completed in 2018 had to be extended for a further year.

In 2020, COVID-19 expenses coupled with election year spending led to the missing of the deficit target. The overall budget deficit on cash basis was 11.7 per cent of GDP against a revised target of 11.4 per cent of GDP.

In 2024, the government has set a budget deficit target of 5.9 of GDP. 

The government in the lead up to the elections has given the assurance that it will restrict itself to budgeted expenditures. 

The Minister of Finance, Ken Ofori-Ofori-Atta, who gave the assurance at a meeting with holders of Ghana’s international bonds, said in spite of 2024 being an election year, the government would stay within the International Monetary Fund (IMF) supported budget.