“A more expansionary fiscal stance will inject additional demand into the economy. While the authorities have confirmed their commitment to implementing fiscal reforms in line with Ghana’s IMF programme, we anticipate significant public expenditure overruns ahead of the December 2024 general election, particularly given that the ruling New Patriotic Party (NPP) trails behind in the polls,” noted Fitch Solutions.
Historical data bolsters Fitch Solutions’ forecast revealing a consistent augmentation in public expenditure as a proportion of the size of the economy during electoral cycles. Specifically, since the inception of the century, election years have witnessed an average growth of 3% in public spending relative to economic metrics. This trend underscores the government’s strategic deployment of subsidies and social welfare initiatives as a conduit to cultivate public allegiance.
Fitch Solutions, however, noted that the deployment of social welfare programs in the lead-up to the December 2024 elections is poised to fortify disposable incomes, thereby catalyzing domestic consumption and aligning with the ruling party’s electoral strategy.
“We anticipate that such measures will be implemented again in 2024, improving disposable incomes and stimulating household spending. All told, we forecast private consumption growth to tick up to 3.8% in 2024 – from 3.2% in 2023 – contributing 2.9 percentage points to headline real GDP [Gross Domestic Product] growth,” it added.
Fitch Solutions’ analysis furnishes a nuanced perspective on Ghana’s evolving fiscal landscape, highlighting the intricate nexus between political imperatives and economic stewardship. As the electoral calendar unfolds, stakeholders and observers will remain attuned to these fiscal nuances, navigating the confluence of political strategy, policy dynamics, and economic trajectory with discerning acumen.
