As Finance Minister, Ken Ofori-Atta will be presenting the 2020 Mid-Year Budget Review to Parliament coming Thursday, July 23, 2020, an immediate former Finance Minister, Seth Terkper, has dared the government to account on how the various funds secured to deal with the impact of COVID-19 pandemic was used.
In addition to measures in dealing with the impact of the global pandemic on the country, the government has had the opportunity to access different funds such as the International Monetary Fund, World Bank, Stabilization Fund and the Bank of Ghana, all intended to help mitigate the economic impact caused by the virus.
While addressing the media, Mr. Terkper supposed that the government is rather, 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.
Also, Mr. Terkper laid cautions to 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.”
COVID-19 outbreak to cost Ghana GHS9.5bn – Finance Minister
Since the virus outbreak in Ghana, Mr. Ken Ofori-Atta said the country’s fight against the pandemic was going to cost Ghana GHS9.505 billion. Adding that, it will be 2.5 per cent of Ghana’s revised GDP.
Mr. Ofori-Atta also added that there will be a fiscal gap of GHS11.4 billion. For example, import duties will fall short of the target by GHS808 million for the 2020 fiscal year.
Also due to the partial lockdown of Accra, Tema, Kumasi and Kasoa, forming part of measures to mitigate the virus spread, the economy was to a large extent, going to worsen.
Effect of the virus outbreak on Ghana’s GDP growth.
According to Mr. Ofori-Atta, a preliminary analysis of the impact of the virus “on the real sector shows that 2020 projected real GDP growth rate could decline from 8 per cent to 2.6 per cent with an outbreak and 1.5 per cent 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 per cent of revised GDP.”
“The primary balance will correspondingly worsen from a surplus of GHȼ2,811 billion (0.7 per cent of GDP) to a deficit of GHȼ5.6 billion (1.4 per cent of GDP),” he added.
