Banks in the country have expressed their readiness to increase their profits this year as government is expected to increase spending in line with the impending 2012 general elections.
It is anticipated that political parties, particularly the incumbent National Democratic Congress (NDC), would spend more during the election period, as their spending is hardly enough to cover total advertising expenditure and campaign trails, among others.
Observers have indicated that election years are more likely to compel politicians and the incumbent government to make unbudgeted expenditure.
Earlier this month, a renowned Economist and Executive Director of the Center for Economic Policy Analysis (CEPA), Dr. Joe Abbey, stated that the uncertainties that characterize the financial indiscipline in the last 18 months of an election year and the huge government spending often led to inflation and depreciation of the cedi against the dollar and other major foreign trading currencies.
Dr Abbey, who was the Chairman at the Institute for Democratic Governance’s (IDEG) third reflection seminar on Political Transitions, said the situation leads to high cost of doing business.
To him, such development scares foreign investors away.
He said investors are worried and need assurances that their businesses would be insulated.
Dr Abbey therefore urged the Bank of Ghana (BoG) to come up with a package that would assure investors of the stability of the national economy.
He also called on the BoG to put measures in place to cut down on undue government spending to prevent inflation and lower the cost of doing business without disruption.
Government has come out to assure the public that it would minimize its spending this year.
Addressing shareholders of Fidelity Bank at its 5th Annual General Meeting (AGM), William Panford Bray, Chairman of the Board of Directors of the Fidelity Bank of Ghana Limited, who is a renowned banker said, “We expect increases this year as government increases its spending in line with the elections later in the year.”
Paa Kwesi Amissah Arthur, Governor of the Bank of Ghana, said “there is no denying the underlying pressure the economy faces, especially given the election year uncertainties which have previously been characterized by unplanned expenditure.
By Emelia Ennin Abbey