With five months to the December 2020 general elections, the two contending parties, the ruling New Patriotic Party (NPP) and opposition National Democratic Congress (NDC) are yet to unveil their manifesto; for the electorate to decide which of the two parties has better policies and programmes.
An election manifesto is a document that spells out the programmes and policies political parties offer to convince the electorate to vote for them. There are two outcomes in any elections; either a government is retained in office or an alternative is voted into office.
The reasons for the delay of NPP and NDC to unveil manifestoes are not clear; but the onus is on Ghana’s leading opposition party to present itself as better alternative. I don’t expect the NPP to deviate from its current policies such as education, agriculture, industrialization, infrastructure development and job creation. So, NDC’s delay in presenting its manifesto might not help its re-election bid. NDC needs to come out with innovative, if revolutionary alternatives to transform the economy post COVID 19. That said, one key factor the electorate might consider in electing a government could be post COVID 19 development and transformational policies and programmes.
In its intelligence report on Ghana released in April, the Economic Intelligence Unit (EIU) stated that it “expects the NPP to retain power, as the party is seen as a better custodian of the economy than the opposition National Democratic Congress.” “The Economist Intelligence Unit believes that it would be difficult for the NDC under Mr. John Dramani Mahama to portray itself as the better custodian of Ghana’s economy. In fact, the NPP has said time and again that they are better mangers of the economy than the NDC. “We therefore expect Mr Akufo-Addo and the NPP to secure re-election. However, if the NDC can present a coherent challenge and hold the NPP to account on its unfulfilled campaign promises such as faster progress on infrastructure development the elections could be closely contested”, says the EIU.
According to the EIU, the government’s ambitious industrialization programme is enjoying some success, with investment expected to recover once the virus subsides. Nonetheless, overall progress will continue to be hampered by structural weaknesses and regional imbalances. Driven by falling oil prices and operational difficulties in some oilfields, the economy will contract by 1% in 2020. Real GDP growth will then rebound to an average of 5.7% a year in 2021-24, as the impact of the pandemic fades and oil prices and output both recover. The EIU says the government’s industrialisation drive and policy interventions aimed at strengthening the banking sector will benefit non-oil economic growth over the medium term, although the cost of capital will remain a constraint on some businesses, particularly small and medium-sized enterprises.
In a Mid-Year economic policy statement last Thursday, Finance Minister, Mr. Ken Ofori-Atta underscored the fact that the COVID-19 pandemic was far more than a health crisis. “Ghana has not been spared the painful economic and social impact that COVID-19 has visited on nations, big and small, across the world. The restrictions on movements, has disrupted households and businesses with consequent job losses and reduced incomes in Ghana.”
As the EIU predicted, the Finance Minister admitted that the outbreak of the pandemic was having a negative impact on the financial sector in Ghana. This has prompted the Bank of Ghana to announce various policy measures to help support financial institutions to cushion the adverse impact of COVID-19 on the economy. “It is important to stress that this has been possible because of the responsible and competent management of both the fiscal and monetary space since 2017”, he stressed.
Investment in lives
According to Mr. Ofori-Atta, what underlined the government’s policies and expenditure plans in response to COIVD 19 was the commitment to invest and improve the lives of Ghanaians. “We set out to bring hope, restore confidence in the state and demonstrate care for the people of Ghana. We sought to restore the self-esteem and dignity of Ghanaians and reduce the grinding poverty that was becoming commonplace.”
He said in pursuance of building human capital, the government decided to invest more resources in vital sectors like education, agriculture, industry capital. He described education as the primary driver for upward social and economic mobility. On investment in education he disclosed that GH¢3.2 billion has been invested into Free SHS. This investment provided the opportunity for more than 1.2 million teenagers to gain access senior secondary school. “For their parents and families, this has translated into GH¢2.2 billion in savings. That is money that the State has put back into the pockets of Ghanaians across the country.”
In my opinion the massive investment into secondary education is one bold decision this government has taken, and which will remain in the minds of Ghanaians for years. To be honest for the 350,000-final year SHS students, government paid everything, including their examination fees. That is why I have stated, arguably though, that investment in education (including teacher motivation ) could be a decider of the 2020 elections. In fact, as I listened to the Finance Minister, I thought he was reading the manifesto of his party. As stated earlier, I do not expect the government to defund any of its flagship programmes going into 2020; the government can only add more innovative policies to convince the electorate. The question is, where are the alternative economic and development policies? The electorate need a viable alternative that will build the current gains, and not policy reviews. Progressive development visions should aimed at building on what has been achieved, not deviating from the economic gains.
On job creation Mr. Ofori-Attah disclosed that the government had also invested GH¢1.6 billion in creating 100,000 jobless. He said the interventions were targeted at educated young adults who had no hope of ever landing a job after school. “Through the new NABCO initiative, they have been engaged in various state and private institutions, with some of them securing permanent jobs in the process. According to him, other interventions like planting for Food and Jobs programme , apart from producing food, also created jobs along the value chain under the 1D1F programme. He said currently over 70 factories are in full operation, with many more under various stages of construction. “So far, we have invested over GH¢1.85 billion in our agriculture sector, resulting in agricultural growth which averaged about 2.0 percent between 2014 and 2016 to an average of 5.2 over the past 3 years. That is putting food in abundance on the table of Ghanaians, thus reducing the cost of living and putting money in the pocket of over 1.2 million farmers nationwide.”
The Finance Minister then announced a three-year GH100billion development programme, which, in my view could become the foundation for the Government’s long-term policy of “Ghana Beyond Aid.” The programme named “Ghana CARES, “Obaatan Pa” will be launched by President Akufo-Addo in the next few weeks.
Mr. Ofori-Atta indicated plans to seek Parliamentary approval for additional funds to undertake capital expenditure. The EIU had pointed out that as a result of the economic difficulties cause by COVID 19, Parliament might have to approve a number of emergency measures—including a lowering the ceiling on withdrawals from the Ghana Stabilisation Fund (a sovereign wealth fund). Underlining the growing strain on the public finances, the government is also reportedly considering abandoning its policy of not borrowing from the Bank of Ghana (BoG, the central bank)—a constraint that has been in place since 2015 in line with IMF recommendations after Ghana sought policy credibility. EIU has indicated that given the current exceptional circumstances, it expects the IMF to agree to a temporary waiving of this requirement. “In 2021-24 we expect the expenditure/GDP ratio to decline, as the government seeks to narrow the fiscal deficit in the wake of the elections and an anticipated recovery from the pandemic.”
The forecasts indicate that the government’s original fiscal projections for 2020 have been thrown into disarray by the global pandemic and associated fall in oil prices. As a result, the government now estimates that oil receipts will be some GH¢5.7bn (US$989m) below the figure previous forecast based on an average oil price assumption of US$58/barrel. Nonoil revenue will also drop to about GH¢2.3bn lower, largely because of lost import duties—as borders remain closed and companies are producing at half capacity. It is my personal view that despite a drop in revenue , public expenditures are expected to rise, especially as Ghana heads for an election. While health expenditure is expected to increase by nearly GH¢1.6bn demands for election projects might not cease, especially as the government declared 2020 as the year of roads.
Oil prices and tax reforms
EIU forecasts that a resurge in oil prices combined with an increase in production from new fields and could support revenue growth. Although many loopholes are likely to remain, tax reforms will also help to boost government receipts. According to the Finance Minister, given the developments in revenue and expenditure, the overall Budget Balance, registered a deficit of GH¢16,892 million, or 4.8 percent of GDP, which was financed from both domestic and external sources. However, to finance its expenditure after 2020 government needs to motivate Ghanaians to buy more bonds and treasury bills.
But according to EIU, given the weak local demand for government debt, owing to limited liquidity in the domestic capital market, the government will continue to depend on external borrowing.
The fear is that given the current turbulence in global capital markets, the near-term focus will shift increasingly to borrowing from multilateral lenders, possibly at high interest rates and the resultant increase of the debt to GDP ratio. In this respect, Ghana might have to continue requesting for assistance from the World Bank, alongside a disbursement under the IMF’s rapid credit facility, says the EIU. Borrowing is not a bad phenomenon; it is what the money is used for that matters. After all, we are not in normal times.
Economic Intelligence Unit (2020). Ghana Political and economic outlook. EIU
Ministry of Finance (2020). Mid-Year Review of the Budget Statement and Economic Policy. Government of Ghana.
(***The writer is a Development and Communications Management Specialist and a Social Justice Advocate. All views expressed in this article are my personal views and do not represent those of any organization(s). (Email: [email protected]. Mobile: 0202642504/ 0243327586/0264327586)