Economist and Professor of Finance, Godfred Bokpin, has cautioned that the ongoing standoff in Parliament between the NPP and NDC over the majority’s determination could prompt investor reactions that may harm the economy.
Professor Bokpin explained that, for example, investors might decide against rolling over the government’s short-term debt instruments (T-Bills), which would disrupt the government’s financing plans. Some may also choose to hoard liquidity in foreign currency, a move that could have serious consequences for the stability of the local currency.
“Investors are clearly concerned,” said Bokpin. “Whether we acknowledge it or not, the consequences could go beyond the decline in portfolio flows and foreign direct investment. Even ordinary Ghanaians may respond in ways that don’t benefit the economy.”
He further noted that some investors, especially those holding short-term government treasury bills, may choose not to roll over maturing bills at the end of November or early December due to the uncertainty surrounding the political deadlock.
“This would have significant implications for the government’s gross financing needs. There are also concerns that some individuals may move their liquidity into foreign currency, potentially out of fear of a worst-case scenario, which would further destabilize the local currency,” he added.
Prof. Bokpin made the assertion speaking during the NorvanReports and Economic Governance Platform (EGP) X Space Discussion on the topic, “Ghana’s Parliamentary Impasse: Impact on The Economy and Business Community.”
Meanwhile, the Government last Friday exceeded its T-BIll auction target raising over GHS 5.8 billion in short-term funds. Also, the local currency as of Friday, was selling at GHS 16.78 for $1 on the interbank market.
Speaking further during the X Space, Prof. Godfred Bokpin dismissed concerns that the ongoing parliamentary impasse could impact the government’s ability to pay public sector salaries in the coming year due to delays in approving budget appropriations.
He clarified that while the deadlock in Parliament has disrupted legislative operations, it does not inherently threaten salary payments for public workers.
Addressing the issue, Prof. Bokpin explained that certain provisions within Ghana’s fiscal framework, particularly Article 180 of the 1992 Constitution and sections 23 and 24 of the Public Financial Management Act, allow the government to access funds under an “expenditure in advance of appropriation” measure.
This provision is traditionally implemented in the first quarter of an election year, enabling the government to spend until the formal budget is passed.
Prof. Bokpin highlighted that the approval for expenditure in advance of appropriation must be granted by December 31, giving Parliament ample time to resolve its current crisis and pass the necessary resolutions.
He noted that, in previous election years, such as 2020, the expenditure in advance of appropriation was presented as early as October 28, allowing the government to secure the requisite approval for early-year spending.
He acknowledged, however, that while it would be ideal for Parliament to resolve its impasse promptly to ensure the smooth processing of appropriation, the December 31 deadline remains achievable.
Additionally, despite the delays, some MPs have suggested that the expenditure approval could be finalized immediately following the election if necessary, as long as it meets the constitutional deadline.
Speaking on the way forward and the need to resolve the current Parliamentary impasse, Prof. Bokpin emphasized the collective responsibility of all branches of government to serve as positive examples, stating that the ongoing tensions undermine Ghana’s democratic progress and erode public confidence.
He voiced concerns over the strained relationships between the branches of government, which he believes have intensified since 2021, and warned that this division could lead to unforeseen and potentially destabilizing consequences.
“Our actions and inactions in one way or the other help or take a lot away from us,” he noted, stressing the importance of mindful leadership, especially at the highest levels, where their conduct influences behaviour across all levels of society.
Highlighting the broader economic implications, Prof. Bokpin observed that political stability and unity are crucial to attracting the capital Ghana needs for development.
He cautioned that “capital will only go to where it feels right,” pointing to the nation’s reliance on foreign investment flows and the need for a favourable environment to draw in both portfolio and foreign direct investments.
