Ghana is seeking support from the World Bank to close possible financing gap in the 2020 Budget as a result of the possible negative impact of the Coronavirus (Covid-19) pandemic.
Government is therefore discussing with the World Bank Group to tap into a US$12 billion fast track Covid-19 facility to help with the measure.
Finance Minister Ken Ofori-Atta disclosed this when he briefed Parliament on Tuesday 17th March, 2020 on the implication of the Coronavirus on the Ghanaian economy.
He stated that though events of the infection are still unfolding, preliminary analysis by the Ministry of Finance indicate the Coronavirus will impact negatively on the petroleum receipts due to the collapse of international crude oil prices, custom receipts and other receipts.
Others, he said, include health related expenditures and financing conditions on the fiscal front.
According to him, the infection is also affecting tourism, travel and conferences, Foreign Direct Investments (FDI), international trade, food and nutrition and poverty reduction.
He indicated that government is also in discussion with the International Monetary Fund (IMF) to access part of a US$10 billion facility made available by the IMF to address the Coronavirus through the Rapid Credit Facility.
“We are also in discussion with other multilateral and bilateral partners on potential assistance to close the financing gap,” he stated
According to Mr. Ofori-Atta, the Ministry has worked tirelessly and successfully and raised US$ 3 billion from the Eurobond Market at the best rates after being granted approval by Parliament.
The capital market, he said, has since collapsed but stressed the timely issuance of Ghana’s Eurobond has provided the necessary buffer to support the economy in these grave times.
Mr. Ofori-Atta also provided update on the financial sector clean-up and disclosed about GH¢5 billion has been released in a combination of cash and a 5-year amortized zero-coupon bond to receivers paying-agent, Consolidated Bank Ghana (CBG) to enable it settle the remaining outstanding claims.
The amount required, he said, was provided by the Receiver of the failed SDIs and MFIs as the total amount needed to settle all outstanding claims.
“The Ministry of Finance released the cedi equivalent of $184,822,412.43 in cash; and issued a 5-Year zero coupon bond with a value of GH¢4 billion in favor of the Receiver’s Paying Agent.”
According to him, government has provided enough liquidity with the GH¢5 billion to enable the Receiver’s agent to pay fully all depositors of the defunct banks and savings and loans banks in line with the President’s directive.
“All those affected will receive cash and a fixed deposit which shall be credited to their account with CBG. The fixed deposit with CBG will be paid in 10 equal installments over 5 years beginning from March 2021,” he said.
“This will be in addition to the cash component of up to GH¢70,000 per retail depositor which has already been made available to all depositors.
“In fact, up to 98% of all depositors will be paid in full with the cash since most of the deposits are less than GH¢70,000”, he added.
Contributing to the Minister’s statement, Ranking Member on the Finance Committee of Parliament, Cassiel Ato Forson, expressed disappointment the Minister failed provide an economic impact assessment of the infection on the Ghanaian economy rather than the fiscal assessment.
According to him, the fiscal deals with only the expenditures and receipts in the economy and stressed an economic impact assessment would have provided a much wider review of the situation.
He noted, however, much as there is negative impact on the economy due to the Coronavirus in terms of revenue receipts, the Ghanaian populace could also benefit as a result of low oil prices.
Mr. Forson observed that this would reduce the cost of doing business for a lot of companies and stressed the need for an evaluation of this to assess whether it will translate into real sector economic growth or affect the economy.
He averred that failure of the Minister to inform the House about the $100 million announced by the President to fight the Coronavirus was unfortunate.