Dr. Daniel Anim-Prempeh, Chief Economist at PIED, cautioned the government against excessive spending to appease voters, warning that it could undermine Ghana’s macroeconomic progress under the IMF’s $3 billion loan program.
In an interview with the Ghana News Agency, he emphasized that overspending could damage the country’s credibility with creditors and investors.
Instead, Dr. Anim-Prempeh advised the government to stick to budgeted expenditures and policy measures, while enhancing domestic revenue collection to ensure fiscal discipline and maintain economic stability.
“Although we’re recovering gradually, it’s not so firm. Any reckless expenditure will distort the macroeconomic environment and may even defeat the purpose of the IMF coming onboard to help us stabilise the economy,” he stated.
Dr. Anim-Prempeh warned that the ruling government’s eagerness to win re-election and maintain power could lead to implementing unauthorized programs not included in the budget, potentially jeopardizing fiscal responsibility and macroeconomic stability
“For example, the running mate or a government official goes to a particular place and realises that they’re losing votes there and the only way to sway the people is to execute one or two projects, which may not have been budgeted for. This will cause overspending,” he said.
Dr. Anim-Prempeh cautioned that reckless spending could undo recent macroeconomic progress, and advised the government to exercise restraint and remain committed to the terms of the IMF agreement, avoiding actions that might compromise the country’s economic stability.
“People are willing to invest into the country because of the presence of the IMF, which gives the country some credibility. If after the elections and the Fund is not happy with our review, it may distort investors coming onboard, and that may also affect our recovery agenda,” Dr Anim-Prempeh noted.
Despite a historical trend of increased spending during election years in Ghana’s Fourth Republic, the government has reaffirmed its pledge to maintain fiscal discipline and avoid excessive expenditure in this election year, breaking with the past pattern.
