The cedi may sink to a record and a bond rally may stall if Ghana’s presidential election fails to yield a clear winner, according to investors and economists.

While President John Mahama and rival Nana Akufo-Addo have both pledged to speed up economic growth and implement an International Monetary Fund program if they win Wednesday’s polls, a contested result may jeopardize that continuity of policy. Observers have called the race too tight to call, evoking memories of 2012 when an indecisive election led to a nine-month court battle before Mahama was handed victory.

“The big risk in the election is that you get a contested result, we go back into the court, things drag on, the government turns away from the IMF program,” said Kevin Daly, who helps oversee about $11 billion of emerging-market assets at Aberdeen Asset Management Plc in London. “The downside risk comes more from not who wins, but how they win.”
Daly said the markets would view a clear victory for either candidate as positive. The winner will face the task of reigniting growth in West Africa’s second-biggest economy from the slowest pace in two decades, while reining in inflation and consolidating public debt. Both Mahama, 58, and Akufo-Addo, 72, have pledged to build infrastructure and use oil-industry revenue to boost manufacturing and create jobs.

After expanding at the fastest annual pace in Africa at 14 percent with the start of oil exports in 2011, Ghana’s economy is projected to slow to a 3.3 percent growth this year amid a crippling energy crisis. While a shortage of foreign exchange is driving the currency down, bonds have rallied as the government reined in its budget deficit courtesy of a $933 million emergency loan from the International Monetary Fund.

The cedi weakened 4.2 percent to 4.3150 per U.S. dollar on Wednesday. The nation’s Eurobonds rose for a third day, sending yields nine basis points lower to 9.23 percent. The Ghana Stock Exchange Composite Index was little changed. The currency is heading for a 12 percent annual loss, while bond yields are down almost 3 percentage points this year.

The cedi could fall to as low as 4.60 and yields could rise to 9.5 percent by the end of the first quarter if a close election means a court battle to determine the winner, Gaimin Nonyane, a London-based senior macroeconomic specialist at Ecobank Transnational Inc. said.

Investors are betting that opposition leader Akufo-Addo would not only continue the status quo in economic policy but also be slightly more market-friendly than the incumbent Mahama.

“After January we’d expect business as usual,” Nonyane said. “Regardless of who takes up the administration I’ll expect broad policy continuity.”