Fitch Ratings has declared that the opposition National Democratic Congress (NDC) has the best chance of winning the general election scheduled for December 2024.
They believe that budgetary consolidation is undermining the incumbent government’s political platform.
According to Fitch, IMF support will help Ghana’s economy and, as a result, reduce threats to social stability in 2023 and 2024.
It also stated that a July 2022 Afrobarometer research revealed that 85.0% of Ghanaians thought the government was doing a terrible job combating corruption. It also noted the quick decline in economic conditions in 2022 and the slow progress in the fight against perceived corruption. As a result, it is anticipated that this would intensify voter opposition to incumbents.
Additionally, according to Fitch Ratings, the IMF has expressed reservations about the President of Ghana, Nana Akufo-Addo,’s 2017 introduction of the free senior high school program, calling it “poorly targeted”.
It was reported that prospective changes to the program to control spending may damage the NPP’s campaign platform, raising the likelihood of an NDC victory.
“The government will likely meet IMF targets over the coming months as opposition lawmakers will only offer modest pushback against economic reforms. We believe that IMF assistance will improve economic conditions in Ghana and therefore limit risks to social stability over the coming quarters. Following the formation of an official creditor committee, the IMF approved Ghana’s USD3.0bn Extended Credit Facility in May, which led to an immediate USD600mn disbursement, with another USD600mn expected in Q423.”
Fitch Ratings
NDC To Lose Elections If It Meddles With IMF Deals
Fitch has warned that the NDC will lose credibility before to the 2024 general elections, if it opposes any IMF-related changes that the government of Ghana will implement.
Despite Ghana’s divided parliament, Fitch claims it does not anticipate the administration facing difficulties in carrying out the IMF-focused reforms.
Inferring that the government will attempt to execute additional fiscal policy reforms in the months to come, it stated that Ghana’s agenda is partially focused on improving fiscal dynamics by increasing income and cutting expenditure.
The agency also noted that, because the National Democratic Congress (NDC) and the ruling New Patriotic Party (NPP) both hold the same number of members in the House, opposition lawmakers have been able to effectively oppose prior legislative initiatives like the e-levy in 2022.
“Despite Ghana’s split parliament, we believe that the government will be able to introduce most IMF-related reforms over the coming months. Ghana’s programme is in part focused on improving fiscal dynamics by raising revenues and decreasing expenditure, implying that the government will seek to implement additional fiscal policy changes in the months ahead.
“However, given that NDC leader John Mahama called on the government to seek IMF assistance in early 2022, pushback against IMF-related reforms could negatively impact the NDC’s credibility going into the December 2024 general election – something we believe the opposition will aim to avoid.”
Fitch Ratings
Fitch said that there is a chance the government will not achieve its IMF goals in 2024. It also noted that, since the start of this decade, election years have seen an average increase in total expenditure as a proportion of GDP of 3.0 percentage points, indicating the likelihood of some fiscal slippage in 2024.
However, it stated that it is unlikely that spending that exceeds budget will result in the IMF programme being suspended. It further added that the IMF board allowed waivers for non-observance of performance conditions and agreed to extend the arrangement by one year when governmental expenditures in 2016 (an election year) exceeded budgeted allocations.
“As such, anticipated fiscal slippage in 2024 is unlikely to result in a loss of investor confidence, which – in turn – would weaken the cedi and drive up inflation, and could lead to greater social unrest.”
Fitch Ratings
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