Ahead of the presentation of the 2020 Mid-Year Budget Review to Parliament on Thursday, July 23, 2020, a former Finance Minister, Seth Terkper, has challenged government to come clean on the use of the various funds set aside to deal with the impact of the COVID-19 pandemic.
In dealing with the impact of the ravaging pandemic on the country, government has had to assess different funds from different places like the International Monetary Fund, World Bank, Stabilization Fund and the Bank of Ghana.
Addressing journalists, Mr. Terkper alleged that government is diverting monies collected in the name of COVID-19 to finance some of its other pressing needs.
“The financing which we secured purposely for COVID, the $ 1 billion IMF loan, the World Bank support, the Stabilization Fund withdrawal, other releases that we have got, all amounts to about, at the time we did our calculation, GHC 10 billion. I think I heard the minority say that it’s about GHC 16 billion which is higher than the cost of COVID. So even though the cost of COVID could have gone up, it is important to note that back then when the Bank of Ghana financing and other financing were being considered we had secured enough for COVID.”
“So why were we getting those additional borrowings and the rest ?. The only explanation is that the borrowing was being done or is being done to finance items that were not being disclosed” he claimed.
The former Finance Minister also warned of fiscal credibility issues for Ghana if the current government continues to exclude exceptional cost from its budget reporting.
“…So we are saying that it will be good for us to come now and explain why we have a difference with the IMF. I’ve said that in the past, Ghana’s fiscal practice is to include all exceptional cost, and I hope that the Mid-Year review will go back to that. Government must reconcile its own position with the fund as it’s important for its own fiscal credibility. Doing this for us will mean government’s admission of adjustment to performance in the past, which was shown as stellar. But it’s fair to Ghanaians, and especially when you accuse other administrations of poor performance.”
Coronavirus pandemic to cost Ghana GHS9.5bn – Finance Minister
The fight against the novel coronavirus pandemic was to cost Ghana GHS9.505 billion, according to Ken Ofori-Atta, the Finance Minister.
This will be 2.5 percent of Ghana’s revised GDP.
“Speaker, the total estimated fiscal impact from the shortfall in petroleum receipts, shortfall import duties, the shortfall in other tax revenues, the cost of the preparedness plan, and the cost of Coronavirus Alleviation Programme is GHS9,505 billion,” he said when he appeared in Parliament today, Monday.
Ultimately, there will be a “fiscal gap of GHS11.4 billion,” the Minister added.
Import duties, for example, will fall short of target by GHS808 million for the 2020 fiscal year, the minister indicated.
The effect of the virus on the economy will worsen because Ghana just began a two-week partial lockdown of Accra, Tema, Kumasi and Kasoa.
The pandemic will also take a toll on Ghana’s GDP growth.
Mr. Ofori-Atta said a preliminary analysis of the impact of the virus “on the real sector shows that the 2020 projected real GDP growth rate could decline from 8 percent to 2.6 percent with an outbreak and 1.5 percent with a partial lock-down.”
The Minister also explained that “the overall fiscal deficit will increase from the programmed GHȼ18.9 billion to GHȼ30.2 billion, which will be 7.8 percent of revised GDP.”
“The primary balance will correspondingly worsen from a surplus of GHȼ2,811 billion (0.7 percent of GDP) to a deficit of GHȼ5.6 billion (1.4 percent of GDP),” he added.