Why fiscal discipline should be crucial in 2024?
Ken Ofori-Atta, Finance Minister

Why fiscal discipline should be crucial in 2024?

We have had a history, at least in the 4th Republic, that during an election year, we go way overboard when it comes to spending within our means, hence the talk of fiscal discipline ahead of the 2024 election year.

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In the period prior to the 2000 general elections, the cedi had depreciated by over 70 per cent. Our two major export commodities, gold and cocoa, prices plummeted to their  lowest and we spent our way through elections that year.

In the end, we declared ourselves as Highly Indebted and Poor Country (HIPC). About US$ 9 billion in external debts were cancelled and we were given a clean slate to start with.

Under President Kufuor in 2004 (that is almost 20 years ago), however, was an exception rather than rule, where we were able to maintain some semblance of fiscal discipline. HIPC relief was a contributory factor.

In 2008 however, we went back to the old ways. In the run-up to the general elections, we threw away all caution to the wind and we ended up in deep financial crisis right after the elections. Some point to the global financial crisis and the decline in our major primary exports as the major source of our challenges then. 

We then sought an IMF programme in 2009 to bring back the economy. In 2012, however, we saw yet again the “breaking of the bank” during the 2012 elections. Election-related spending caused us so much.

Right after that we went for the “Senchi Accord” which eventually led us to the IMF. In 2016, while under an IMF programme, we again saw huge gaps in both the twin deficits of fiscal and current accounts deficits each hitting above double figures in an election year. Same was repeated in the 2020 election, taking advantage of the COVID-19 pandemic to spend our way through the crises. Eventually, we also saw huge gaps in both the twin deficits.

By 2017, we extended the existing IMF programme for another one year to give the new government some fiscal space to manoeuvre.

Then in 2022, after touting on roof tops that “we will not go the IMF”, we had to eat back our words and walk straight into the arms of the Bretton Woods institution.

The stakes are much higher in the 2024 general election year, if the previous 2020 elections gives us a clue of what to expect next year.

Graphic Business also takes note of government’s budget statement for 2024. The fiscal projections are modest as we are within the projected figures of the IMF programme. A growth rate of 2.8 per cent, end year inflation projection of 15 per cent, 3 months of import cover and projected GDP value of GH¢1 trillion and a primary balance of about 0.5 per cent.

That the 2024 general elections cannot be business as usual is certainly not lost on us. We at Graphic Business will presume. 

In the light of what the economy has gone through over the past year; an excruciating Domestic Debt Exchange Programme (DDEP) that has caused so much losses for investors on government bonds and taking a toll on almost every sector of the economy, banks, insurance, industry, services, Bank of Ghana and individuals alike.

The country is still engaged in discussions with our external creditors that is yet to conclude and financing gap that is needed to bridge government revenue and expenditure gap. 

These scenarios, therefore, call for greater circumspection as we head towards the 2024 election especially with regard to our fiscal discipline.

Some watchers of the economy  are worried that we may throw away all the marginal gains looking at what has happened or the trend in an election year.

Therefore, Graphic Business cautions that this country cannot afford another economic meltdown. The implications are too dire. The hunger on the streets and the groundswell of disenchantment among a chunk of the citizenry who are feeling the heat of the current economic challenges should not be tested any further.

Graphic Business would like to believe that the sacrifices of all those who have lost huge savings on their investments under the DDEP cannot not be thrown out of the window on the altar of winning an election.

There are far greater achievements than winning political power.

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