The Ministry of Finance of the Republic of Ghana has called on President Nana Addo Dankwa Akufo-Addo to defer assenting the Proper Human Sexual Rights and Ghanaian Family Values Bill until the Supreme Court rules on the legal issues tabled by some key national stakeholders including some civil society organizations and the Commission on Human Right and Administrative Justice.
The Ministry of Finance in a statement after an emergency meeting with the Chief Director and Directors of the Ministry, the Governor and 1st Deputy Governor at the Bank of Ghana, and the Commissioner-General of Ghana Revenue Authority indicated that the bill if assented into law by the President would have some direr consequences on Ghana’s finances, particularly the country’s 2024 Budget.
“On the 28th of February, 2024, the Parliament of Ghana passed the Proper Human Sexual Rights and Ghanaian Family Values (“Anti-LGBTQ”) Bill. The Bill is yet to be forwarded to H. E. the President for assent. The passage of the Bill has triggered reactions from some of Ghana’s Development Partners, International Financial Institutions and CSOs in the country”
Ministry of Finance
Among other things, the Ministry of Finance stated that its correspondence with Ghana’s international development partners shows that if the Anti-Gay Bill is assented into law by President Akufo-Addo, it would have repercussions on several World Bank-funded programs in the country.
According to the Ministry of Finance statement, the expected US$300 million financing from the First Ghana Resilient Recovery Development Policy Operation (Budget Support) which is currently pending Parliamentary approval might not be disbursed by the Bank when even it is approved by Parliament if the bill is assented into law.
The statement also stated that the ongoing negotiations on the Second Ghana Resilient Recovery Development Policy Operation (Budget Support) amounting to US$300 million may be suspended if the bill is assented into law by President Akufo-Addo.
Other funds that are likely to be suspended if the Anti-Gay bill is assented into law by President Akufo-Addo according to the Ministry of Finance include the ongoing negotiations for US$250 million to support the Ghana Financial Stability Fund, disbursement of undisbursed amounts totaling US$2.1 billion for ongoing projects, and preparation of pipeline projects and declaration of effectiveness for two projects totaling worth US$900million.
The Ministry of Finance statement emphasized that in total Ghana is likely to lose US$3.8 billion in World Bank Financing over the next five to six years, and further stated that for the 2024 financial year alone, Ghana will lose US$600 million in Budget support and US$250 million for the Financial Stability Fund.
According to the Ministry, such loss will negatively impact Ghana’s foreign exchange reserves and exchange rate stability as such inflows are expected to shore up the country’s reserve position.
Impact On The Implementation Of The 2024 Budget
Furthermore, the Ministry of Finance outlined that the potential loss of such financial resources would create a financing gap in the 2024 budget that must be addressed either through a significant reduction in the expenditures or additional domestic revenue mobilization.
The statement indicated that failing to undertake such appropriate measures would undermine the government’s ability to achieve its targets in the 2024 Budget and ultimately derail the International Monetary Fund Extended Credit Facility Program.
“While there is no direct conditionality in the IMF-ECF Programme relating to the passage of the Bill, the principles of the current IMF-ECF Programme are built on predictable financing from Development Partners (Financing Assurances) including the World Bank funded Ghana Resilience Recovery Development Policy Operations.
“Hence the non-disbursement of the Budget Support from the World Bank will derail the IMF programme. This will in turn trigger a market reaction which will affect the stability of the exchange rate”.
Ministry of Finance
Moreover, the Ministry of Finance stated that the assent of the Proper Human Sexual Rights and Ghanaian Family Values Bill by President Akufo-Addo could go a long way to impact Ghana’s Debt Restructuring Programme.
The statement indicated that negotiations with the Official Creditor Committee (OCC) and Eurobond holders under Ghana’s debt restructuring program are predicated on the success of the IMF program, and hence, a derailed IMF program will have dire consequences on the debt restructuring exercise and Ghana’s long term debt sustainability.
In addition, the Ministry of Finance recounted that several discussions, with officials from the German Government, and officials of the Ministry Finance revealed that the German Government is equally against the passage of the Anti-Gay Bill.
According to the statement, given Germany’s relatively strong influence in the European Union and the Official Creditor Committee, it is likely that when the bill is assented into law, Ghana would receive some negative reaction from the German government which could impact the country’s finances.
Other Key Recommendations
Touching on other recommendations, the Ministry of Finance urged President Akufo-Addo to embark on an engagement with local conservative forces, particularly religious bodies and faith-based organizations to communicate the economic implications of the bill’s passage and build a stronger coalition in support of key development initiatives that may be affected when the bill is assented into law.
The Ministry also urged the government to engage with conservative countries such as those in the Arab region and China, seeking potential resources to fill in potential financing gaps that might arise as a result of the passage and assent of the Anti-Gay Bill.
Meanwhile, at the Ministry of Finance level, the statement indicated that several key initiatives are being put in place to address the financial implications of the bill.
According to the statement, the Ministry is set to continue engaging with the International Monetary Fund (IMF) to explore alternative credible sources of funding that will help plug any financing gaps due to the passage and assent of the Anti-Gay Bill.
Additionally, the statement stressed that the Ministry of Finance will consider possible expenditure rationalization to accommodate potential shocks resulting from the withdrawal of resources if the bill is assented into law by President Akufo-Addo.
The statement also stated that the Ghana Revenue Authority (GRA) is poised to launch a vigorous revenue mobilization drive, focusing on implementing approved measures and ensuring compliance.
A crucial aspect of the Finance Ministry’s strategy involves leveraging the principles of “Ghana Beyond Aid” to reshape resource mobilization.
According to the statement, the government aims to improve domestic resource mobilization efforts, working towards a medium-term tax revenue to GDP target of 17%-18% with the overarching goal to gradually reduce dependency on development assistance, aligning with the sustainable development vision of a self-reliant Ghana.
The Ministry of Finance concluded its statement by underscoring that the passage of the Anti-Gay Bill necessitates fortifying local financial systems and strengthening partnerships with other countries.
The Ministry emphasized that the government aims to navigate the complexities of international relations and emerge with a robust, resilient economy, characterized by Ghanaian ownership of key economic sectors.
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