Economic expert cautions gov’t not to overspend in election year

• Posted on February 27, 2019
• by Ellsamwise King
• Comment

Professor of Economics at the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, says despite his expectation of positive macroeconomic performance in 2019, Nana Addo’s government must be disciplined in the last quarter of 2020 not to derail the gains.

Over the past 30 years, Ghana’s budget has been in deficit every single year.

The deficit to GDP ratio has ranged from the lowest level of 1.3 percent in 1991 to the highest of 11.5 percent in 2012, with the worst performances coming in election years, except 2004.

In an interview with Citi Business News, Professor Quartey called for extra effort on the part of government to ensure that the fiscal indiscipline witnessed in election years is not repeated in 2020.

“We have most often remained disciplined so going forward, 2019 to first half of 2020 we’ll remain disciplined. My caution or worry will be the last 3 or 6 months of 2020 (the election year). It’s one thing I don’t know how well prepared we are to deal with in terms of the discipline”.

He was of the view that if the Fiscal Responsibility Law and the Fiscal Responsibility Council work effectively it may help in addressing this fear of government attempting to overspend.

“In 2016 we were still with the IMF yet we overspent and as such we overshot our target. So the last 3 months of an election year for me is very crucial and I’m yet to be convinced that we have what it takes to remain disciplined in the last 3 months of 2020.”

While delivering his third State of Nation Address to Ghanaians in Parliament, President Nana Akufo-Addo reiterated his government’s commitment to maintaining the needed discipline to ensure that Ghana does not return to the International Monetary Fund (IMF) for the 17th time.

A team from the IMF in February completed the 7th and 8th reviews under the Extended Credit Facility program which Ghana entered into in 2015.

An approval from the IMF board in March should lead to Ghana exiting the program after April 3rd.

But during his State of the Nation Address, President Akufo-Addo stated that in order not to repeat the cycle of returning to the Fund immediately after exiting, Ghana will have to ensure that systems put in place like the Fiscal Council, which are to ensure discipline in the management of the economy, are as effective as possible.