The numerous promises being made by the presidential candidates contesting the December 7 election cannot be realistically implemented in the short term because the national economy is not in the best position.
Funds cannot be found to implement the promises “even with expected modest additional revenues from oil starting from 2010”.
This is contained in the 2007 Annual Economic Review of the Institute of Economic Affairs, Ghana, which reviewed the performance of the economy for the year considered and its outlook.
The presidential candidates have, during their campaigns, made bold promises, including the introduction of free education from the basic to tertiary level, highly subsidised and mechanised agriculture, construction of more road networks, extension of the school feeding programme, free health care among others to be implemented within two to three years.
The politicians have, however, not given out much information about how they intend to finance their promised initiatives.
But the report indicates that it would be difficult for the economy to finance these since the growth indicators are not favourable.
The report noted that “the increasing expectations and demand of public sector workers for higher wages starting from 2009 when the Fair Wages Commission should start implementing new wage levels, the planned district assembly election in 2010, and the population and agricultural censuses to be undertaken by the Ghana Statistical Service in 2010, and extra outlays on government services to cater for population growth are all additional sources significant increases in government expenditure” which would constrain government spending.
According to the report, the increasing domestic and external debt was also a source of worry which could hinder the achievement of a substantial economic growth in the medium term.
It said that the total public debt currently stands at about 7,800million dollars, which is more than the stock of public debts in January 2001 despite the huge external debt cancellation in 2006.
“While the current total public debt is just under 50 per cent of GDP and does not pose imminent financial threat, it is the rapid rate of increase of total public debts over such a short period of time that is of concern,” the report said.
It projected that the general outlook of the economy in the short to medium term is likely to be characterised by increasing levels on inflation, high budget deficits and widening trade and balance of payment deficits.