The COVID-19 epidemic could cost the global economy US$2.7trillion, according to the Organisation for Economic Corporation and Development (OECD) Interim Economic Assessment.
Global GDP growth is projected to drop to 2.4% in 2020 from 2.9% in 2019, with growth possibly even being negative in the first quarter of 2020.
Ghana’s economy is not left out of this global economic meltdown, as the pandemic is expected to cost GHc 9,505billion (2.5% of revised GDP).
Ghana has not been spared from the crude oil price-plunge caused by the price war between Saudi-Arabia and Russia, coupled with impact of COVID-19.
The Africa Centre for Energy Policy (ACEP) has projected a 53% oil revenue loss in 2020. This will hugely affect the country’s revenue target of GH?67.1billion for this year.
Funding the Epidemic Expenditure
On 11th March 2020, President Nana Addo Dankwa Akufo-Addo announced the use of US$100million to cover COVID-19 expenditure.
The funding sources, according to the finance minister as presented to parliament on 30th March 2020, will include: GH?1,250 million from the Ghana Stabilisation Fund; GH?1,222.8million from the BoG’s deferred interest payments on non-marketable instruments; adjustment of expenditure by GH?1,248million; securing the World Bank DPO of GH?1,716million; securing the IMF Rapid Credit Facility of GH?3,145million.
Others are to: reduce the proportion of Net Carried and Participating Interest due GNPC from 30% to 15%; and amend the PRMA to allow a withdrawal from the Ghana Heritage Fund to undertake urgent expenditures in relation to the coronavirus pandemic.
There is an estimated US$591.1million in the Ghana Heritage Fund. The decision to make some withdrawals from the Heritage Fund should be looked at again because of sustainable development. Ghana should be prepared to face the medium- to long-term consequences of some of these economic decisions.
The World Bank Group on 3rd March, 2020 announced an initial package of up to US$12billion in immediate support to assist countries coping with health and economic impacts of the global outbreak.The fund is to help developing countries strengthen health systems – including better access to health services to safeguard people from the epidemic, strengthen disease surveillance, bolster public health interventions, and work with the private sector to reduce the impact on economies.This financial package will provide grants and low-interest loans from the World Bank Group.Similarly, the IMF has also made available US$50billion through rapid-disbursing emergency financing for low-income and emerging markets. The Rapid Credit Facility (RCF) is available to low-income countries and carries a zero-interest rate.