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Akufo-Addo stresses need for disciplined spending ahead of election year

President Akufo-Addo

President Nana Akufo-Addo has said his government is working to ensure it does not overspend in 2020, which is an election year.

Ghana has been known to exceed its budget deficit targets by significant amounts.

For the last election year in 2016, Ghana’s budget deficit target was 5.3 percent but the deficit widened to 7.8 percent.

Four years prior, in 2012 the target was 6.7 percent but the deficit ended up reaching 12.5 percent.

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Pressure from the electorate for development and social interventions ahead of elections is known to contribute to the habit of overspending in election years.

Speaking ahead of the budget presentation by Finance Minister, the President stressed that fiscal discipline would be key when he spoke at the Africa Investment Forum in South Africa.

“We think that it is extremely important that we maintain discipline in the way we manage our public finances and that has been our major objective and so far so good. We are realising it.”

President Akufo-Addo added that he was hopeful that his administration would resist “the temptation in an election year to turn on the tap” and that “the work we have done will take us through, without having to do that [overspend.].”

One of the key measures put in place has been the Fiscal Responsibility Act, which along with the Public Procurement Act, the Public Financial Management Act which provide guidelines regarding prudent fiscal management and procurement.

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The Fiscal Responsibility Act, for example, puts a 5 percent cap on the budget deficit that could be recorded in a fiscal year.

Economic turnaround

Also at the forum, President Akufo-Addo said his government has succeeded in turning around the fundamentals of Ghana’s economy.

“We inherited a situation with a large fiscal deficit, which has been turned around now; considerable imbalances in the way in which our economy was being run have also been turned around; a 15.4% inflation is today at 7.6%, the lowest in two decades. These are the building blocks for us.”

He also highlighted the role agriculture and minerals exploitation has played in this regard with the for Planting for Food and Jobs policy among others.

“Planting for Food and Jobs has proven to be a spectacular success. First of all, in the way it is addressing the availability of food stuffs. We are now in the position, for the first time in over a decade, of exporting food stuffs to our neighbours. We are very keen in developing private sector interest, because Ghanaian agriculture is largely smallholder,” he added.