Government has provided a commitment to adhere to budgeted expenditures, even though 2024 is an election year.
This assurance was given by the Minister of Finance, Ken Ofori-Atta, during a meeting held in London with holders of Ghana’s international bonds.
He affirmed that despite the upcoming election year, the government would adhere to the budget outlined in the International Monetary Fund (IMF)-supported plan, which is set to be presented to Parliament next month.
After implementing the Post-COVID-19 Programme for Economic Growth (PC-PEG)-supported IMF program for four months, Ghana’s economy is beginning to display signs of stability.
In the first half of the year, the gross domestic product (GDP) growth has averaged 3.1 percent. Inflation, which had reached a 22-year high of 54.1 percent in December 2022, has declined to a 12-month low of 38.1 percent in September.
On the fiscal front, the primary balance on a commitment basis for the first half of the year showed a surplus of approximately GH¢2 billion, surpassing the targeted deficit of GH¢4 billion.
The Gross International Reserves (GIR) also reached $2.1 billion, which is equivalent to 1.0-month import cover. This is an improvement from the $1.5 billion (0.6 months of import cover) recorded at the end of December 2022, and it has contributed to the stabilization of the cedi.
As Ghana approaches another election year, concerns have arisen within the investor community about maintaining this growth trajectory, given the historical overspending associated with election years, leading to substantial budget deficits.
Many are apprehensive that the progress achieved under the three-year Extended Credit Facility with the IMF could be undermined during an election year. Nonetheless, Mr. Ofori-Atta has provided assurance that the government will remain committed to the program and the 2024 budget.
“Ahead of the 2024 election year, let me assure you that we are committed to implementing the IMF supported PC-PEG as planned, and this is what our constituents expect from us,” he stated.
“This will help us further support the strong economic recovery,” the Finance Minister added.
Mr. Ofori-Atta emphasized that, in light of the significant impact of last year’s crisis, Ghanaians are now looking to the government for the delivery of macroeconomic stability, a rapid return to low inflation, and the sustained stabilization of the cedi’s value. They are not expecting an expansion of public spending.
“This is completely in line with the successful implementation of our IMF programme,” Mr Ofori-Atta stated.
The minister emphasized the government’s dedication to maintaining a comprehensive array of policy reforms, backed by the IMF. Their primary objective is to guarantee fiscal and debt sustainability, which will involve revising the Fiscal Responsibility Act, 2018 (Act 982), and expediting the implementation of the Integrated Tax Administration System.
Mr. Ofori-Atta noted that the government is also directing its efforts towards financial sector reforms, with a focus on bolstering the capital reserves of commercial banks, enhancing the Bank of Ghana’s (BoG’s) inflation targeting framework, and rebuilding international reserves buffers.
“We are also working on social protection and structural reforms, including expanding the coverage and enhancing the benefits in real terms under the Livelihood Empowerment Against Poverty Programme, the National Health Insurance Scheme and the School Feeding Programme,” he stated.