Parliamentary chaos, economic survival: Restoring credibility amid fiscal crisis
Ghana’s Ninth Parliament, tasked with steering the nation through one of its worst economic crises in decades, has instead become a theatre of chaos.
Recent clashes between the majority National Democratic Congress (NDC) and minority New Patriotic Party (NPP) during the vetting of ministerial nominees—marked by physical altercations, vandalism and walkouts—have exposed a dangerous disregard for democratic norms.
This turmoil is at a perilous time: Ghana is implementing a stringent $3 billion IMF bailout programme to stabilise its debt-ridden economy.
The conduct of lawmakers not only undermines public trust, but poses grave financial risks, threatening to alienate investors, worsening borrowing costs, and derailing the fragile recovery.
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Ghana’s economy remains in critical condition. Inflation hovers near 24 per cent, the cedi has lost over 20 per cent of its value against the dollar in 2024, and public debt exceeds 80 per cent of GDP.
The IMF programme demands fiscal discipline, including austerity measures and revenue reforms, to restore macroeconomic stability.
Investor confidence, already shaken by recent sovereign debt defaults, hinges on the government’s ability to demonstrate political coherence and commitment to reforms.
Parliament’s role in this recovery cannot be overstated. It must approve critical legislation, oversee budget implementation, and hold the executive accountable.
Yet, the institution’s credibility is eroding as lawmakers prioritise partisan bickering over national interest.
Financial implications of instability
Investor flight and capital outflows:
Global investors, particularly holders of Ghana’s Eurobonds, scrutinise political stability when assessing risk.
The World Bank’s 2023 Global Economic Prospects warns that “political uncertainty amplifies sovereign risk premiums in emerging markets.”
Ghana’s recent parliamentary clashes signal dysfunction, raising fears of policy paralysis or reversals.
For instance, after similar legislative chaos in Argentina in 2023, bond yields surged by 300 basis points within weeks.
Ghana risks a repeat, especially as it seeks to re-enter international capital markets post-IMF programme.
Credit rating downgrades:
Credit rating agencies (Moody’s, Fitch, S&P) explicitly factor governance and institutional strength into sovereign ratings.
In 2022, Fitch downgraded Ghana partly due to “weakened governance.”
Renewed parliamentary instability could trigger further downgrades, locking Ghana out of affordable financing.
For example, Kenya’s 2017 election violence led to a Moody’s downgrade, increasing its Eurobond coupon rates by two per cent.
IMF programme at risk:
The IMF’s Extended Credit Facility requires Ghana to pass structural reforms, including tax adjustments and expenditure cuts.
A fractious parliament delays these measures, risking programme suspension.
Sri Lanka’s 2022 IMF deal collapsed after political infighting stalled reforms, triggering hyperinflation and social unrest.
Local business confidence erosion:
Domestic investors, pivotal to economic recovery, are equally wary.
The Ghana Chamber of Commerce warns that “political unpredictability stifles long-term planning.”
Private sector credit growth has stagnated at 5% in 2024, reflecting caution.
Countries facing similar political-economic crises have adopted measures to align legislative conduct with fiscal responsibility:
• Chile’s Cross-Party Fiscal Responsibility Pact (2020)
Amid social unrest and economic downturn, Chile’s Congress signed a bipartisan agreement to fast-track pension, tax and labour reforms.
The pact reassured markets, stabilising bond yields and attracting $10 billion in foreign direct investment (FDI) by 2021.
•Indonesia’s “Unity Government” Model (1998–2004)
Post-Suharto Indonesia faced economic collapse and political chaos. By forming a unity cabinet with opposition figures and prioritising economic bills, parliament restored investor confidence, achieving 5% GDP growth by 2005.
•South Africa’s Parliamentary Code of Conduct
South Africa’s parliament mandates strict disciplinary measures for disruptive behaviour, including fines and suspensions. While not perfect, this framework has minimised physical clashes during high-stakes debates, such as the 2021 budget crisis.
• Germany’s ‘Stability Culture’
Germany’s debt brake law, embedded in its Constitution, requires cross-party consensus on fiscal policy. This culture of stability has shielded its economy from political volatility, maintaining AAA ratings despite coalition governments.
Recommendations
To avert economic calamity, Ghana’s political class must urgently prioritise stability and collaboration:
• Adopt a Cross-Party Economic Recovery Pact
Mirroring Chile, the NDC and NPP should negotiate a binding agreement to fast-track proceedings, ensuring bipartisan support for austerity measures and revenue bills.
• Enforce Parliamentary Discipline
Implement South Africa-style penalties for misconduct, including fines for vandalism and suspensions for physical altercations.
• The fiancé committee of Parliament should invite brief lawmakers on the financial consequences of instability, fostering a culture of accountability.
•Leverage civil society oversight
Empower groups such as IMANI Africa and the Ghana Anti-Corruption Coalition to monitor parliamentary conduct and publish “stability scorecards.”
Test of leadership
Ghana’s economic survival hinges on its leaders’ ability to rise above partisan brinkmanship.
As economist Dr Ngozi Okonjo-Iweala famously stated, “No nation can tax or borrow its way to prosperity without political cohesion.”
Parliament’s conduct is not just a domestic concern—it is a financial variable scrutinised by global markets.
The IMF programme offers a lifeline, but its success depends on a functional legislature. If Ghana’s lawmakers continue to prioritise chaos over compromise, they risk plunging the nation into irreversible economic decline.
The world is watching: Will Parliament become a catalyst for recovery or a monument to failure?
