Worried over mounting fiscal pressures on government as this year’s general elections beckon, Ghana’s development partners have warned government to stay within budget.
They fear the usual excessive election-related expenditures could derail the country’s efforts to restore economic stability.
The fears which have found expression in the warning come in the wake of assurances from government that it will remain fiscally prudent this year.
“We do see a loosening of the belts when we are approaching an election ;we have seen that over and over again and so there is no reason to believe that this year is going to be significantly different from previous election years,” says economic analyst with Ratings Agency, Standard and Poor’s, Ravi Bhatia.
This opinion is interesting because many experts have played down the argument of a recurrence of the election year spending ritual, pointing out that the phenomenon is unlikely to occur due to the fact that Ghana is on a programme with the International Monetary Fund (IMF).
To these experts, it is a foregone conclusion that supervision from the Bretton Woods Institution should discourage frivolous and unproductive public expenditures.
Ravi Bhatia maintains that having had pre-electoral spending sprees in previous years, “it will not be a good thing to see again as the country tries to consolidate; bearing in mind that one time Ghana was the rising star, the stand out economy in the growth picture across Africa.”
He states further that the medium term outlook for Ghana will change for the better“only if Ghana puts its macro-house in order.”
Afterdowngrading the country last year, ratings agency, Standard and Poor's last week announced that it had maintained a stable outlook for Ghana's creditworthiness.
It will be recalled that Fitchhad at sometime last year stated that Ghana’s track record of increasing spending ahead of the elections in 2008 and 2012 raised concerns over government’s ability and willingness to meet the ambitious fiscal consolidation targets set out by the International Monetary Fund (IMF).
Last March, another ratings agency, Moody's stated that it “expected a more muted fiscal consolidation path over the next two years than envisioned by the government in view of significant investment needs to resolve the power crisis, in addition to the election cycle in 2016 which has historically coincided with expenditure overruns.”
The IMF in its latest staff report reckoned that the 2016 budget had to accommodate election costs, estimated at GH¢825 million.
The Fund insists that it is essential that government sticks firmly to its policy of strict expenditure controls, by maintaining the wage bill within the budget limits, while controlling discretionary spending and protecting priority spending.
“It is also important to continue to adhere to the domestic arrears clearance plan and avoid incurring new domestic or external arrears,” the IMF report added.
Economist, Dr Godfred Bokpin of the University of Ghana Business School regrets that Ghana has not been prudent in the management of its resources, especially the fiscal purse, during election years.
According to him, “the negative news of corruption that we keep hearing is affecting investor decisions and so it’s not surprising to hear they are worried and cautioning fiscal restraint.”
“What is important for us going into the election is for government to be prudent with the limited resources at its disposal; if we are able to put the little that we have to very good use, then we have enough room to make a case that if we had more we could do better,” he pointed out.
“Once donors have the impression that what they provide is being put to good use, they have confidence in the country,” he added.
Other experts who spoke to this paper were concerned about the practice where public funds are used to finance projects such as the construction of roads most of which never get completed.
“There are so many projects that are started in election years that are not finished but are initiated just to convince the electorate to vote for one candidate or another; they are abandoned after the election or they are so poorly done that they become rather costly,” one analyst lamented.
Government, they suggested must strengthen ongoing revenue administration reforms, improve public financial management and expenditure rationalization to enhance the efficiency of public spending, as well as the implementation of new debt management strategies.
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