President Mahama has expressed confidence that Ghana will not overshoot its budget deficit target as an election year approaches.
[contextly_sidebar id=”qLPWn1rNp8vugpmq75Dl7UnINUXmxRcl”]According to him, the recurring challenge with overspending in an election year will not be experienced as government maintains strong fiscal discipline to keep the economy on track.
‘’Normally if you don’t maintain fiscal discipline to ensure that you implement the budget strictly, you will find out that by the end of the electoral cycle you have overshot your deficit target and that’s what happened in 2012.’’ President Mahama said.
In 2012 which was an election year, the country’s budget deficit reached about 12% of GDP and dropped to about 10.8% the following year.
According to President Mahama, government has been doing the corrective measures from 2013 to bring the macro economy back on track ‘happily its beginning to show signs that we have an economic turnaround, we are on track.’’ He said.
Economists over the years have blamed the country’s widening fiscal deficit, to overspending during election years, a situation the IMF programme is expected to curtail.
The Managing Director of the International Monetary Fund (IMF), Christine Lagarde in an earlier interaction with the press admitted that that the real test for Ghana’s commitment to the balance of payment supports would be 2016, which is the election year.
According to her, just like other countries across the world, election years are always difficult for countries under any programme because they struggle to meet their targets.
Meanwhile according to President Mahama Ghana is on track to narrow the budget deficit more than its target this year.
He believes the gap will fall to 7.2 percent of gross domestic product, below government’s goal of 7.5 percent following a review of the economy by the International Monetary Fund.
According to President Mahama, who was in an interview on Uniiq Fm, strong fiscal policies being undertaken by the finance ministry and the central bank is to among other things stabilize the macroeconomic aspect of the economy to allow for a reduction in interest rates and cushion the falling cedi.
”After the first review by the IMF and just using first quarter results , we are on track for7.2 even though our target is 7.5 percent; we have reduced borrowing from the central bank from 10 percent to 5 percent and so we are not over borrowing from BOG.”
On the Ghana cedi, the President said ‘’I have seen some stabilization in the cedi even though it’s still finding its correct level because it went to the extreme of 4.5 and then it came back to another extreme of 3.5 and is now hovering between 3.5 to 3.7 so I think its in the process of finding its true level’’
By: Lorrencia Nkrumah/citifmonline.com/Ghana