What do investors need to know about Ghana’s election?

Ghanaians will go to the polls on December 7 to pick a new president and government. Investors will be closely watching the election to see how the winner will lead an economy that is coming out of failure on its debts.

Eighty-year-old President Nana Akufo-Addo is turning down after two terms as leader of the gold- and cocoa-producing country. Former President John Dramani Mahama and Vice President Mahamudu Bawumia are the front-runners to take her place. Eleven other people are running.

WHAT DO INVESTORS WANT TO KNOW?

The West African country is nearing the end of a long process to restructure its debt. The government reworked $13 billion in international bonds as part of a larger plan to cut debt by $4.7 billion and free up $4.4 billion in cash flow during the current IMF program, which runs until 2026.

The only thing that needs to be done now is a deal with business creditors that don’t hold Eurobonds. However, investors are already looking past the election to see if the winner will keep up the economic changes that are needed to make the debt sustainable again.

Mahama, 65, who is ahead in a number of polls, has promised to try to change the terms of the IMF deal in order to get more money. A public debt cap of 60–70% of GDP will be added to the rule by him, so that the country doesn’t borrow too much.

But from 2012 to 2017, when he was president before, the government borrowed more money to pay for building capital projects like roads. People also didn’t like him because there wasn’t enough power and prices were too high.

Bawumia has promised to bring the economy up to date by digitizing it, keeping taxes low, and being careful with money so that growth can average 6% per year.

The 61-year-old has also promised to limit government spending to 105% of the tax income from the previous year, set up a flat-rate tax system, and give 3.5% of the country’s GDP in public spending to private companies to build public infrastructure.

THE WINNER MAY BE ABLE TO RENEGOTIATE THE IMF PROGRAM.

When a new leader takes over, they often contact the IMF to talk about programs that are already in place. This is exactly what happened in Sri Lanka.

The IMF is Ghana’s last-resort lender as it restructures its debt under the G20’s Common Framework plan. The IMF says its main goal is to help the government restore fiscal stability while allowing debt sustainability and growth for everyone.

As of now, it has approved Ghana’s economic success under the $3 billion loan scheme that is in place.

The Fund says that Ghana’s current program could be changed because IMF-backed reform plans are made with states and are reviewed on a regular basis.

But when people talk, they need to remember that countries need to be able to keep their economic goals in mind.

WHAT OTHER ECONOMIC THINGS ARE GOING ON?

No matter who wins the race, they will have to deal with a rising cost of living, high unemployment, and frequent power blackouts.

The National Democratic Congress, Mahama’s party, wants to boost spending on infrastructure and social areas like health and education if it wins the election. This will help the economy grow and create jobs.

The New Patriotic Party of Bawumia wants to make economic security a top priority by bringing in more private investments and cutting inflation.

Oxford Economics said in a study note that Ghana’s high debt load will make it hard for the next government to make decisions. A study by a consulting firm showed that Mahama’s campaign claims to improve people’s and families’ economic situations could be put to the test by the need to balance his policies against the IMF’s calls for fiscal restraint.

WATCH OUT FOR COMMODITIES

The new government will have to oversee the approval of new oil and gas projects. Production started in 2010 and was supposed to peak in 2024.

Mahama wants to give people in the area more control over future mines and oil projects if he wins.

The chocolate industry also needs immediate care.

Last season, the world’s second-largest cocoa producer had its lowest output in 20 years. This was due to low pay for farmers, plant diseases, more bean smuggling, and illegal gold mining that destroyed farms.

The world’s cocoa market is eagerly waiting to see if the new president will follow through on an IMF policy suggestion for major changes in the sector, as well as a new marketing model that has replaced the over-30-year-old cocoa loan syndication.