20101113
reuters

JOHANNESBURG (Reuters) - With up to 17 African countries facing national elections next year, politics will loom large in the minds of investors but the risk of pre-poll fiscal blow-outs may not be the big threat many imagine.

Ahead of the busiest African political calendar since the end of the Cold War, the International Monetary Fund (IMF) has dusted off the history books to analyse electoral cycles and government spending across the continent to see how they relate.

After crunching the numbers from 150 elections in 44 African countries from 1988 to 2009, the surprising results are that, unlike many democracies elsewhere, African governments are not inclined to spend their way to re-election.

"Averaged across all countries and all elections, both government spending growth and fiscal balances tended to be fairly similar in all years of a typical election cycle," the IMF concluded.

At one level, this points to the impotence of governments and central banks in guiding economies that are still highly geared to the vagaries of rain-fed farming or external demand for the hydrocarbons and other minerals they produce.

But it also sheds light on the "quality" of African democracies, a thorny issue given that five decades after independence, many are run by a single party whose authority is rubber-stamped every five years by a cowed electorate.

In most countries, budgets were actually more balanced in election years than in preceding years -- although Gabon, Ghana, Kenya, Mozambique, Niger, Seychelles and Togo were notable exceptions, the IMF added.

Similarly, it found no link between economic and political cycles, even though most states have fixed term limits that increase the logic for elected governments to try to engineer a boom to coincide with a ballot.