Coronavirus to wipe off GH¢9.5bn – Finance Minister counts Ghana’s losses
The government has projected more than GH¢9.5 billion loss in revenue as coronavirus pandemic continues to wreck havoc on humans and economies.
The Finance Minister, Ken Ofori-Atta, counted Ghana’s losses before legislators in Parliament as government sought approval for more than GH¢1billion for the fight and an alleviation programme in relation to the outbreak.
He explained the estimated shortfalls were expected in tax revenues, import duties, and petroleum receipts.
Other areas accounting for financial loss to the government are the cost of preparing the country to fight the outbreak and the cost of the Coronavirus Alleviation Programme targeted at helping households and businesses affected in Ghana’s “unprecedented challenge.”
Breaking down the effects of coronavirus on the economy, the Finance Minister explained, the 2020 budget was drawn last November based on an oil price of $62.6 per barrel.
But as at March 30, 2020, brent crude sold at $22.9 per barrel, triggering a GH¢5.679 billion loss in petroleum revenue.
It is petroleum revenues that are used to fund the Annual Budget Funding Amount (ABFA) which is also used to support flagship policies such as free SHS.
Petrol dollars also go into the Ghana Heritage Fund, the Ghana Stabilisation Fund and also the Ghana National Petroleum Corporation (GNPC).
At the level of taxes, the government has estimated, it would lose GH¢ 808 million in import duties, and non-oil tax revenue of more than GH¢2.25billion, Ken Ofori-Atta said and described the picture as “grim”.
He said the coronavirus pandemic required a re-calibration of economic projections.
This could deal a blow to the government’s plans to keep the deficit in check in an election year. Ghana has a history of widening deficits as successive government outspend the budget to keep their grip on power in election years. Last year, the government passed a Fiscal Responsibility Act to help it and successive governments keep their deficit at a five per cent maximum, unless under emergencies.
The biggest hit is seen in Ghana’s GDP, which is expected to fall freely from 6.8% to 2.6%, as the country records more coronavirus cases. The partial lockdown in Ghana means even the 2.6% to fall further to 1.5%.
If the lockdown of Accra and Kumasi is to be extended to a total lockdown, “it could get worse”, the Finance Minister expressed fears.
Ghana’s overall fiscal deficit set at GH¢18.9billion (4.7% of GDP) is expected to widen to as much as GH¢30.2 billion or 7.8% of GDP, the former investment banker continued.
Ghana is therefore left to bridge a fiscal gap of GH¢11.4bn or 2.5% of GDP.
The country’s primary balance, the Minister said, “would correspondingly worsen from a surplus of GH¢2.811bn (0.7% of GDP) to a deficit of GH¢5.6bn (-1.4% of GDP)”