There are growing indications that the government may exceed its budget in the second half of the year as election-related activities intensify. Data from the Bank of Ghana reveals a significant increase in government borrowing through treasury bills in August, coinciding with the resurgence of several infrastructure projects, some of which are new, while others were previously stalled.
In the first half of the year, the government largely adhered to its budget limits, earning praise and sparking hope for a shift away from the excessive spending typically seen during election years. However, recent developments suggest a reversal of the fiscal discipline demonstrated earlier this year.
In May, the government borrowed approximately GH¢15.7 billion, followed by GH¢16.7 billion in June and GH¢15.75 billion in July. With one more treasury bill auction remaining in August, the government has already borrowed nearly GH¢19 billion (GH¢18.959 billion), surpassing July’s total by over GH¢3.2 billion. The government aims to borrow as much as GH¢26.29 billion in August, which is GH¢8.24 billion more than its target for July. This sharp increase in borrowing signals a significant rise in government debt.
On the project front, President Nana Akufo-Addo recently broke ground for the first phase of the Tema Motorway expansion project, which is estimated to cost $350 million, funded largely by the Ghana Infrastructure Investment Fund. Additionally, several stalled projects have been revived, and new ones have been initiated. These include the expansion of the Tema-Dawhenya road, the Ashaiman to Asutuare road, the Adenta to Dodowa road, the Kasoa to Winneba road, the Ofankor to Nsawam road, the Teshie-Nungua interchange, and multiple interchanges in Kumasi.
While these projects are unlikely to be completed before the end of the year, the financial resources required to commence and sustain them until year-end are substantial. This pattern bears a resemblance to previous election years that concluded with significant budget deficits.
Historically, during election years when Ghana was under an International Monetary Fund (IMF) programme, the first half of the year often exhibited signs of fiscal discipline, only to give way to excessive spending in the second half. This shift typically results in economic instability and a higher cost of living, with subsequent austerity measures in the following year.
