Fitch predicts a low risk of fiscal slippages pending December 2024 elections

International ratings agency, Fitch Ratings, has predicted that there is a low risk of policy slippage in the build-up to the December 2024 general elections, despite a record of fiscal slippage in election years.

The agency noted that this low risk is expected due to the country’s current commitment to the International Monetary Fund.

“We estimate the 2024 primary surplus, on a commitment basis, will reach 0.3% of Gross Domestic Product, representing a 4.6 percentage points adjustment compared with 2022, driven by a 0.6 percentage points increase in revenue and a 4.1 percentage points reduction in primary expenditure,” Fitch said.

It added: “Despite a record of fiscal slippage in election years, we consider there is a low risk of policy slippage in the lead up to the elections due in December 2024, given the strong commitment of authorities to the IMF programme, but there is currently greater uncertainty over the degree of commitment of a new administration.”

According to Fitch, Ghana’s primary surplus is expected to reach 0.9% of Gross Domestic Product in 2026 on a commitment basis.

It also noted that Ghana achieved a current account surplus of 1.8% of GDP in 2023, up from a 2.3% deficit in 2022, an improvement fueled by the suspension of external debt payments and a reduction in merchandise imports.

“We anticipate the current account balance to return to a deficit of 0.7% of GDP in 2024, on difficulties in the cacao sector and external debt service resumption, followed by 1.5% and 1.7% in 2025 and 2026, respectively,” Fitch was quoted by myjoyonline.com.

It further noted that these moderate current account deficits (CAD), compounded with large disbursements from international financing institutions, would enable gross international reserves to gradually increase to 2.8 months of current external payments in 2026, from 1.6 months in 2023.

SSD/OGB

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