Contrary to predictions by some economists that present shocks in the Ghanaian economy could spiral into 2016, being an election year, the International Monetary Fund says the John Mahama-led government has taken all the difficult economic decisions that should see Ghana make a difference on the implementation of economic programs in election year.
Though the Fund admitted election years are normally difficult for countries across the world under any program because they struggle to meet their targets, the Managing Director of IMF, Christine Largarde noted, “…Whether it’s Ghana or any other country in the world, election years are always difficult for countries under program because they’re targets, because there are sometimes hard decisions to be made. Election years are not very conducive to those decisions, which is why for the Ghana’s situation a lot of the fiscal adjustment was frontloaded in 2015.”
According to the IMF boss, because the Fund bailout program anticipated the difficulties Ghana would encounter during the election year, a lot of what she described as “front-loaded” fiscal adjustment have been done for 2015.
“So many of the hard decisions have already been taken, which should hopefully make 2016 not a neutral year, but a year when the hard decisions are at a lower level. So I’m very hopeful that Ghana continues to deliver and continues to restore the economic stability that it had and is sensible about its borrowing capacity,” she stated in an online press briefing last week.
In February this year, Ghana secured US$940 million deal from the IMF to help the country turn around the ailing economy by helping to stabilize the cedi and reduce the fiscal deficit.
An IMF team subsequently came to Ghana on June 17 to undertake the first review following the IMF’s approval of the extended credit facility for Ghana early this year.
In his assessment, leader of the IMF team, Joël Toujas-Bernaté stated that “the program is on track, with all performance criteria met except for the ceiling on central bank financing to the government which was technically missed by a small margin.”
He said the IMF is pleased with government’s commitment to the “ambitious fiscal consolidation and structural reforms program, in particular in addressing payroll irregularities, enhancing public finance management and transparency and liberalizing the oil distribution sector.”
Toujas-Bernaté however pointed out that despite the impressive performance, more needs to be done to further enhance tax administration and eliminate tax exemptions to improve the revenue performance over the medium term.
Government and economists have always attributed the country’s widening fiscal deficit to overspending especially, during election years, a situation the bailout program is expected to curtail.
In 2012 which was an election year, the country’s budget deficit reached about 12% of GDP and dropped to about 10.8% the following year.
However, Christine Largarde maintained that that a lot of the hard decisions have already been taken by Ghana, and hopefully, 2016 won't be a difficult one managing the economy.
President John Dramani Mahama last month indicated that his government will not be coerced to overspend ahead of the 2016 elections.
Speaking at a Senior Citizens Luncheon to mark Ghana’s 55th Republic Day Anniversary, President Mahama assured that his government has the political will to spend within its expenditure but urged Ghanaians to support them in their quest to make the IMF program a success.
“I have the political will to see this through. Despite the fact that next year is an election year, and thereby the political season, I am determined to end the economic boom and bust that comes with every election cycle no matter the political cost. I ask for the support of all Ghanaians to help government to strictly adhere to a disciplined expenditure even as we approach an election year in 2016,” he added.
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