Fitch Solutions anticipates significant expenditure overruns ahead of December 2024 elections

Fitch Solutions is anticipating significant public expenditure overruns by the Government of Ghana ahead of the December 2024 general elections.

According to the UK-based firm, this is because the ruling New Patriotic Party government trails the largest opposition party, National Democratic Congress, and would therefore spend heavily to win public sympathy.

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”.

It continued that since the start of the century, public expenditure as a share of the size of the economy increased by an average of 3.0 percentage points during election years.

This reflects the government’s tendency to subsidize utilities and implement social welfare programmes to garner public support.

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 that a moderation in consumer price inflation – due to more favourable exchange rate dynamics – will strengthen household spending.

Again, the likely implementation of social support programmes ahead of the December 2024 elections will support disposable incomes and stimulate domestic consumption.