COVID-19 update Ghana’s economy faces meltdown …as petroleum receipts, FDI, international trade, others are affected – says Finance Minister

Source: Ghanaian Times

The Minister of Finance, Ken Ofori-Atta on Tuesday updated Parliament on the fiscal implications of the coronavirus (COVID-19) on the country.

He said preliminary analysis undertaken by the Ministry of Finance indicated the outbreak of the COVID-19 would affect the country’s petroleum receipts due to the drop of crude prices on the international market.

Government in the 2020 budget statement and economic policy projected to sell the country’s share of crude oil at $56 per barrel but the barrel of crude oil on the world market currently has plunged to about $30 due to the outbreak of the coronavirus.

Mr Ofori-Atta explained that revenues from import duties and other port charges would also dwindle because of the inability of people to import into the country.

“Already the outbreak is affecting the tourism, travel and conferences, foreign direct investment, international trade, food and nutrition and poverty reduction,” he said.

In view of the possible shortfall of government revenue for the 2020 fiscal year, government with approval from Parliament would allocate revenues from the Stabilisation Fund to close a possible funding gap for the 2020 budget.

“We are currently in discussion with the World Bank to tap into a US$12 billion World Bank Group fast track COVID-19 facility to help close the financial gap. In addition, we are discussing with the International Monetary Fund to access part of a US$10 billion facility, made available by the IMF to address coronavirus through Rapid Credit Facility,” he said.

He said the government was also in discussion with other multilateral and bilateral partners on potential assistance to close the financing gap adding that the government was grateful to God for a successful Eurobond market where a US$3 billion was raised at best rate in history before the collapse of the market as a result of the virus.

In a related development, Mr Ofori-Atta briefed Parliament on measures being implemented by government to pay depositors who had funds with defunct micro finance institutions (MFIs) and the savings and loans(SnL) companies.

He said as part of the financial cleanup exercise and  in line with the President’s directive, an amount of about GH¢5 billion had been released in a combination of cash and a five-year amortised zero coupon bonds to the Receiver Paying-Agent, Consolidated Bank Ghana Limited, to enable them settled the remaining outstanding claims.

Mr Ofori Atta said with the fixed deposits, the CBG would pay depositors in 10 equal installments over five years beginning from March 2021, adding that the government had provided cash components of up to GH¢ 70,000 per retail depositor.

“In fact, up to 98 per cent of all depositors will be paid in full with the cash since most of the depositors are less than the GH¢ 70, 000,” he said.

Mr Haruna Iddrisu, Minority Leader said President Akufo-Addo might have exhausted his constitutional allowed terms by 2025 so he must honour his pledge to the depositors by paying them before exiting from office, adding that by that arrangement the depositors’ money would have also depreciated to make meaningless the promise of bailing them out.

He said it was also interesting that the Minister did not use the opportunity to brief the House about the US$100 million captured in the President’s address to the nation on COVID-19 indicating that the country’s response level was inadequate.

Mr Alban Bagbin, the Second Deputy Speaker who was then presiding asked the leadership to as a matter of urgency invite sector Ministers whose mandate crisscrossed with emergence of the virus in Ghana to appear before Parliament to brief the members on their response and preparedness to contain the virus.

BY LAWRENCE MARKWEI