Considering the huge fiscal slippages associated with election years and the risk of political instability, the fund said this may intensify the challenges in the region.

The IMF in its Sub-Saharan Regional Economic Outlook report said this could also dampen growth through heightened policy uncertainty and diminished investor confidence.

The report further indicated that the political instability surrounding elections has been found to not only incur macroeconomic costs but also trigger longer-term fiscal adjustments at the expense of public investment.

It said this also poses risks of policy reversals.

Fiscal adjustments 

The Sub-Saharan region is currently faced with huge public debt burdens, which have necessitated some painful but necessary fiscal adjustments to aid economic recovery.

In Ghana, after a difficult two years marked by high inflation, which peaked at a 22-year high of 54.1 per cent, an unsustainable public debt which represented 93.5 per cent of GDP and a weakening currency, the country formally approached the IMF to help the country implement its fiscal consolidation programme.

Almost a year after implementing the programme, Ghana’s economy appears to be on the path of recovery, with macroeconomic stability emerging once again.

Inflation rose to 25.8 per cent in March 2024, the economy grew by 2.9 per cent in 2023 and the local currency has fairly stabilised, with debt-to-GDP also around 71 per cent currently.

With Macroeconomic stability emerging once again, the key challenge for the country in 2024 has to do with the upcoming elections, considering that elections in this country have always been characterised by huge fiscal deficits. 

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 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 a cash basis was the equivalent of 8.7 per cent of GDP against an IMF programme target of 5.3 per cent of GDP. 
On a commitment basis, the fiscal deficit was 10.3 per cent of GDP. 

It will be recalled that before the 2016 election, 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 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 a 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.

IMF confident 

The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, during her three days visit to Ghana last month, said she was leaving Accra with strong confidence that Ghana would stay the course of its three-year US$3 billion programme with the fund, despite 2024 being an election year.

She said during her visit, she received firm assurances from all authorities that the country would not deviate from the programme.

“I heard it from virtually everyone; I heard it from the President, the Vice-President, the Minister of Finance and the Central Bank Governor. So, I’m leaving Accra with a strong confidence that the programme will be implemented,” she said in response to a question from the Graphic Business at a press briefing in Accra.

She said she could confirm that the government was strongly committed to implementing the programme and going through with the agreed reforms.

The Minister of Finance, Dr Mohammed Amin Adam, has also, in different instances, given an assurance that he would hold the line when it comes to government expenditure, despite 2024 being an election year.

He said he has the commitment of the President and his colleague ministers not to abandon fiscal discipline and would, therefore, ensure that the government stays within its expenditure targets.