LISTEN 5 HOURS AGO Covid-19 epidemic could cost the global economy US$2.7 trillion according to the Organization for Economic Corporation and Development (OECD) Interim Economic Assessment. Global GDP growth is projected to drop to 2.4% in 2020 from 2.9% in 2019, with growth possibly even being negative in the first quarter of 2020. Ghana’s economy is not left out of this global economic meltdown as the pandemic is expected to cost GHȼ9,505 billion (2.5% of revised GDP).
Ghana has not been sparred of the crude oil plunge caused by the price war between Saudi-Arabia and Russia coupled with impact of Covid-19. The Africa Centre for Energy Policy (ACEP) has projected a 53% oil revenue loss in 2020. This will hugely affect the country’s revenue target of GHȼ 67.1 billion for this year.
Funding the Epidemic Expenditure
On 11th March, 2020, President Nana Addo Dankwa Akuffo-Addo announced to use US$ 100 million to cover Covid-19 expenditure. The funding sources according to the finance minister as presented to parliament on 30th March, 2020 will include; GHȼ1,250 million from Ghana Stabilisation Fund, GHȼ1,222.8 million from BoG’s deferred interest payments on non-marketable instruments, adjustment of expenditure by GHȼ1,248 million, secure the World Bank DPO of GHȼ1,716 million; secure the IMF Rapid Credit Facility of GHȼ3,145 million.
Others are; reduce the proportion of Net Carried and Participating Interest due GNPC from 30% to 15%; 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$591.1 million 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.
World Bank Group on 3rd March, 2020 announced an initial package of up to US$12 billion in immediate support to assist countries coping with the 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$50 billion through rapid-disbursing emergency financing for low-income and emerging […]