Fiscal discipline during election years: Here’s how Gov’t has fared over the years

Ghana’s government has been consistently criticized for abusing the perks that come with incumbency during election years. Ruling parties have often been cited for abusing institutional, budgetary, and state media resources for their partisan interest.

As a result of the consistent overspending, even in non-election years, Parliament passed the Fiscal Responsibility Act, 2018 (Act 982) to curb this problem. Among other things, the Act sets the maximum budget deficit at 5 per cent of the Gross Domestic Product (GDP) in a given year.

On the back of this, Finance Minister, Ken Ofori-Atta, has promised that the government will not spend more than it has budgeted for in 2024 even though it is an election year.

He made this assurance in a meeting with holders of Ghana’s international bonds in London on October 16, 2023. The minister’s comment was published by the Daily Graphic.

“Ahead of the 2024 election year, we assure you that we are committed to implementing the IMF-supported PC-PEG (Post-Covid-19 Program for Economic Growth) as planned, and this is what our constituents expect from us”, he stated.

The Minister for Information, Kojo Oppong Nkrumah, also reiterated this government decision after a ministerial retreat by Cabinet on October 22 2023. He said the government is going to limit itself to the revenue available to it.

“We are also trying to, as a result of that, bring some more spending controls; that means that we are going to be tightening spending within the revenue limit of the country,” he said.

After the International Monetary Fund (IMF) and the government agreed on the three-year programme, the IMF’s team lead, Mr Stéphane Roudet, said they will ensure public spending is controlled to prevent budget deficits.

“Efforts will also be made to strengthen public expenditure commitment controls, improve fiscal transparency (including the reporting and monitoring of arrears), improve the management of public enterprises, and tackle structural challenges in the energy and cocoa sectors,” Mr Roudet said on December 12, 2022.

However, the consistency with which Ghana’s governments have overrun expenditure limits contradicts the government’s assurance.

Although Ghana was under an IMF programme in 2016, an election year, it spent more than it budgeted for. The programme required the John Mahama government to not exceed 5.3 percent budget deficit. However, after the 2016 elections, Ghana recorded a deficit of 10.3 percent.

Fact-Check Ghana’s research into Ghana’s budgetary overturns since 1999 shows that governments spend exceedingly more than budgeted for in election years except for 2004.

Source: Bank of Ghana Annual Reports

From the table above, with the exception of the year 2004, Ghana has exceeded the budget deficit ceiling of 5%.

The attitude of Ghana’s government to abandon fiscal prudence in election years, therefore, makes Mr Ofori-Atta’s promise hard to believe.