Despite receiving some financial help from the International Monetary Fund, the World Bank and the Stabilization Fund of the country amounting to US$1.569billion, Ghana still needs GH₵17.9billion to address its fiscal gap as a result of the impact of the novel Coronavirus (COVID-19), the Finance Minister, Ken Ofori-Atta has revealed.
The West African nation’s fiscal gap was pegged at GH₵21.42billion.
The revenue shortfall, according to the Finance Minister, will be sourced from both domestic and external markets.
As a first step measure, the former British colony has turned to its central bank, the Bank of Ghana (BoG), to access a GH₵10billion loan facility in an initiative it has termed as COVID-19 Relief Bond Programme,
The coupon rate of this loan facility is pegged at the BoG’s prevailing monetary policy rate of 14.5% with a 10 years tenor and 2-year moratorium on both principal and interest payments.
The decision to access the emergency fund from the Bank of Ghana is consistent with the provisions in Section 30 of the Bank of Ghana Act, 2002 (Act 612) as amended, Mr. Ken Ofori-Atta told a half-packed Parliament when he appeared before it on Thursday, May 28, 2020, to announce government’s decision to access the emergency loan facility from the central bank.
The BoG, he further announced, has released the first tranche of the loan facility amounting to GH₵5.5billion to the Ministry of Finance.
This was done 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.
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 on various sectors of the Ghanaian economy show that real GDP growth will slow down significantly from the projected 6.8% to 1.5%, with lingering effects on economic activity into 2021 and beyond.
Ghana, Mr. Ofori-Atta 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.
The country’s main opposition political party, the National Democratic Congress (NDC) has kicked against the move citing breaches of the Bank of Ghana Act.