As campaign activities picks up towards the national elections on December 7, Deloitte, a leading accounting and auditing firm, is cautioning the government against overspending. The firm warns that exceeding budget limits could jeopardize the progress made in reducing inflation and improving currency depreciation.
Headline inflation in Ghana fell to 22.8% in June 2024 from 23.2% in January 2023, according to the Ghana Statistical Service (GSS). This decrease has been attributed to lower non-food inflation, tighter monetary policy, ongoing fiscal consolidation by the government, stable transport fares due to steady crude oil prices, and some base drift from previous price increases.
In its assessment of the 2024 mid-year budget statement, Deloitte noted, “The downward trend in inflation and depreciation further affirms that Ghana’s economic recovery process is on track.” However, the firm also drew attention to potential risks: “The upcoming elections and its potential for increased government expenditure beyond targeted levels, as well as the recurrent increase in demand for dollars ahead of the Christmas festivities in the last quarter of the year, present risks to the improved currency depreciation and inflation recorded so far.”
Deloitte emphasized the importance of the International Monetary Fund (IMF) Programme, stating, “Having highlighted the risk to maintaining the positive trajectory noted above, it is important to note that the IMF Programme, whilst serving as a check on government expenditure, also provides an opportunity to boost Ghana’s foreign reserves.” The firm added, “This, together with other inflows expected from the World Bank Development Policy Operation (DPO), might help absorb some of the FX shocks associated with the December festivities.”
