Ghana has fallen on the Bank of Ghana and other donor partners to address the country’s GH₵17.9billion fiscal gap as a result of the economic impact of the novel coronavirus pandemic.
The revenue shortfall, according to the Finance Minister, will be sourced from both domestic and external markets after the country’s fiscal gap was pegged at GH₵21.42billion.
Justifying the decision to seek additional funding in a report on the floor of Parliament on Thursday, May 28, 2020, the Finance Minister, Ken Ofori Atta argued that the tight financing conditions compelled the Akufo-Addo led government to turn to its central bank, the Bank of Ghana (BoG), to trigger a GH₵10 billion loan facility in an initiative described as the COVID-19 Relief Bond Programme.
“The identified financing measures of Government, including the IMF Rapid Credit Facility($1 billion), the World Bank DPO($350 million), Stabilisation Fund($219 million) still results in a residual financing gap of about GH₵ 17.9 billion to be sourced from both the domestic and external markets.”
According to Mr. Ofori Atta, emergency financing from the Bank of Ghana is consistent with the provisions of Section 30 of the central bank’s act, 2002(Act 612).
“The coupon rate of this loan facility is pegged at the BoG’s prevailing monetary policy rate of 14.5% with a 10-year tenor and a 2-year moratorium on both principal and interest payments,” he said.
Mr. Ofori Atta also announced that the first tranche of the loan facility amounting to GH₵5.5billion was released to the Ministry of Finance on Friday, May 15, 2020.
“This is consistent with global policy responses of Central Banks with large scale asset purchases to provide support to manage the pandemic,” Mr. Ofori-Atta noted in his address to the lawmakers.
He also disclosed that the government will introduce remedial measures to bring down the debt stock burden of the central bank, through revenue mobilization enhancement measures, an expenditure rationalization and prioritization programme as well as a strategy to broaden the investor base to access cheaper sources of financing.
Mr. Ofori Atta also added that with the pandemic still in its early stages, data released by the Ministry of Finance and the Bank of Ghana “on the initial potential impact of the COVID-19 pandemic on various sectors of the economy show that real GDP growth will slow down significantly from the projected 6.8 percent to 1.5 percent, with lingering effects on economic activity into 2021 and beyond.”
The country he noted, is developing a 3-year COVID-19 Alleviation and Revitalization of Enterprise Support Program (The Ghana CARES Programme) to help stabilize and revitalize the economy.