Ghana will ramp up spending by a fifth next year as it prepares for an election in 13 months.
Total expenditure, including the clearance of arrears, is projected at 85.9 billion cedis ($15.5 billion), 21% more than the projected outcome for 2019, Finance Minister Ken Ofori-Atta told lawmakers in his budget presentation on Wednesday. Wages and salaries will make up 27% of that. Capital spending is projected at 9.3 billion cedis, 54% more than this year.
With the President Nana Akufo-Addo’s New Patriotic Party expected to seek a second straight term in power when Ghana goes to the polls in December 2020, investors have been looking out for signs of excessive spending, something the incumbents have done in the past. Ghana ended its 16th bailout program with the International Monetary Fund in April, and the government has pledged to maintain fiscal discipline.
“Despite the year being an election year, President Akufo-Addo and his government will ensure that the perennial excessive spending during such periods will not happen in 2020,” Ofori-Atta said. “We shall work within the 2020 appropriation resource envelope and adhere to the fiscal responsibility act to maintain fiscal discipline.”
Ofori-Atta raised the budget deficit forecast for next year to 4.7% of gross domestic product, compared with a prediction of 4.5% given in August. Despite this increase, the shortfall will stay below the legislated 5% until at least 2023, according to his presentation.
The government has started talks with independent energy producers to renegotiate supply contracts under which the state has to pay about $450 million a year for excess power that it doesn’t use. The negotiating teams are close to completing the first round of these discussions, Ofori-Atta said.