As the Minister of Finance Ken Ofori-Atta gets set to present the 2020 budget statement to Parliament, November 13, 2019, analysts are already predicting a difficult year for the Akufo Addo administration in terms of being able to resist the temptation of the perennial election year overspending.
According to international finance newswire Bloomberg in their review and preview of the next fiscal year, “With an election due in 12 months, the spending plans will be a test for the fiscal discipline the government has pledged to maintain after it exited a four-year extended credit-facility program with the lender in April.”
While Ghana passed legislation last year that caps the budget deficit at 5% of gross domestic product, analysts say the Akufo Addo administration will not be able to adhere to the deficit cap because all signs point to that probability.
For instance, despite spending millions to high foreign audit revenue consultants such as the Mckinsey & Co. to help the Ghana Revenue Authority (GRA) to boost revenue collection since 2018, the Akufo Addo administration has continued the revenue shortfall trend from 2016 till date, with the GRA constantly missing revenue targets.
“If the government feels that it must impress at all cost and do something drastic, especially in the implementation of its flagship programs, then I fear Ghana might go back to fiscal slippages again, then the deficit will exceed that limit of 5%,” Patrick Asuming, an economist and a senior lecturer at the University of Ghana Business School said in the Bloomberg report sighted by Whatsup News.
“The minister would have to balance steps aimed at stabilizing debt with the need to finance capital expenditure. He may cut tax exemptions to boost revenue while also giving guidance on possible Eurobond issuance, according to Peter Quartey, director of Accra-based Institute of Statistical, Social and Economic Research in that same report.
However, critics think the stakes are too high for the Akufo Addo administration not to be caught in the usual election-year “curse” and sacrifice important capital expenditure in favour of election-winning spendings.
Meanwhile, the Ghanaian economy is not expected to see any significant growth in 2020 because most of the growth of the economy had been heavily reliant on Ghana’s crude oil production, however, analysts say, this will be tempered in 2020 because of the pressure on crude oil prices on the world market and the fact that no significant new oil finds in Ghana has gone into production.
According to Bloomberg, “The cleanup of the finance industry that saw the number of banks reduced by a third to 23 could also have a negative impact on growth in the short term.”
Finance Minister Ken Ofori-Atta is expected to read the 2020 budget statement to the nation by tomorrow morning. Key clarifications that critics would be looking out for would include a vague promise made by the government to provide seed capital for the construction of the highly controversial National Cathedral. Critics will also be looking out for how an embarrassed government would replace the Lesbian, Gay, Bisexual and Transgender (LGBT) agenda captured in last year’s budget in the form of the controversial Comprehensive Sexuality Education (CSE).