As the country undergoes a three-year International Monetary Fund (IMF) program, it has become exceedingly necessary for the country to be fiscally disciplined, more so, in an election year where incumbent governments over the years have been known for overspending on elections to ensure partisan gains.
Given the recent financial haircut in 2022 and the aftermath of the Domestic Debt Exchange Program (DDEP) on the ordinary Ghanaian, the government has been advised by various entities – think tanks and CSOs mainly – to be mindful of its expenditure on the impending General Elections in December as it may have economic implication for the country.
“Possible election-induced fiscal overruns may induce inflationary pressures and slow the disinflation process. The budgeted increase in capital expenditure from GH¢20.44 billion in 2023 to GH¢28.70 billion in 2024 will likely stimulate price pressures as the government could overrun the programmed amount during this election year”
DataBank: 2024 Quarterly Report
In consideration of the approaching election, the general concern of Civil Society Organizations (CSOs) and Policy Think Tanks is that Ghana’s debt restructuring agreement with the IMF will do little to improve public finance sustainability and economic growth should the funds provided by official creditors serves as a cause for a new round of pre-election spending as is usually the norm.
Moreover, in 2016 during the Mahama administration, although Ghana was under an IMF program, the government spent more than it budgeted for the 2016 General Elections. The program required the government then to not exceed a 5.3 percent budget deficit. However, after the 2016 elections, Ghana recorded a deficit of 10.3 percent.
Over the years different governments have exceeded the budget deficit limits as indicated by the Fiscal Responsibility Act, 2018 (Act 982) passed by Parliament to curb the general budget deficit incurred by governments due to unnecessary expenditure at 5% of the Gross Domestic Product (GDP) in a given year.
The election expenditures of previous governments over the years have therefore become a premise on which experts based their general warning to the government on electoral spending. In 2000 the NDC government incurred a deficit of 9.7, the NPP government incurred 2.9 and 11.5 in 2004 and 2008 respectively, the NDC again incurred 11.8 and 10.3 in 2012 and 2016 respectively while the incumbent government in 2020 incurred an 11.7 deficit in election expenditure.
Impacts of Election Expenditure
The economic implications of unnecessary expenditures made by governments over the years are not so far-fetched, as ordinary Ghanaians will feel the consequences in their daily activities. As the resources that should be invested in the economy are used to fund elections, issues like education, health, and infrastructure development will be neglected. The government is also likely to accrue debts by borrowing money to redirect the economy after huge expenditures on an election.
Also, corruption is highly inevitable in the pursuit of gaining political power. What is usually the norm in Ghana and perhaps the source of huge spending on elections is the tendency of politicians to engage in bribery to secure votes from electorates. This practice not only increases corruption but also builds distrust in public servants (politicians) and the offices they control.
During elections in Ghana, the country’s resources are hugely mismanaged by incumbent governments in a bid to win elections and retain power. It is very likely for governments to sponsor Parliamentary candidates of their political parties to ensure that a substantial amount of Members of Parliament represents the party’s interest in parliament. All these are made possible through misallocated funds from the Public Consolidated Fund plunging the country into an economic abyss after each General Election.
“We have to manage our economy prudently…especially in election years where governments have disregarded the fiscal discipline and have gone out to spend inefficiently… I think that it is a good call that we don’t return to the dark days [recent economic recession] as we approach the elections”.
Dr. Adu Owusu Sarkodie
While there are social and economic implications to overspending during elections, the government can solve the issue of unnecessary expenditure on elections through legislation. The Parliament can pass legislation that imposes a limit on the expenditure that a government is allowed to make during an election. The legislative act can also institute an independent body to regulate not just government expenditure but individual expenditure on elections to ensure that no economic implications are incurred after an election.
Conclusively, while the country prepares for the December 2024 elections, it is advisable and pragmatic to observe fiscal discipline, especially with the country’s current vulnerable state of the economy – with ever-increasing inflation and depreciation rates – which is likely to push Ghana’s economy into recessive mood if resources are not used for their intended purpose but misallocated.
READ ALSO: IMF Bailout Transformative – Akufo-Addo
