It is time for the Akufo-Addo government to use the Stabilisation Fund “to build some additional buffers for the economy”, since the two-week “well-intentioned” partial lockdown of parts of the country, as part of efforts to mitigate the spread of coronavirus, which has, so far, killed five out of two hundred and four people in Ghana, has “obviously, led to some unintended consequences”, former President John Mahama has said.
“The use of the fund”, the flag bearer of the National Democratic Congress said, “Should be directed at cushioning the general population through this period of economic slowdown”.
“These measures may include short term temporary tariff relief in respect of utilities”, he suggested.
According to him, “While petroleum prices have dropped in recent times, the directive to commercial drivers to reduce the number of passengers means their incomes have also reduced”, and, so, “Additional relief, in the form of a temporary waiver of some petroleum taxes to further reduce fuel prices, will be helpful to the motoring public, especially commercial drivers”.
A few days ago, Finance Minister Ken Ofori-Atta told Parliament that the total estimated fiscal impact, as a result of the coronavirus pandemic, is GHS9.5 billion (2.5% of revised GDP).
This would be from the shortfall in petroleum receipts, shortfall in import duties, shortfall in other tax revenues, the cost of the preparedness plan, and the cost of Coronavirus Alleviation Programme.
He said a recalibration of the 2020 Fiscal Framework underpinning the approved 2020 Budget to reflect the fiscal impact of the coronavirus, without incorporating measures, shows that the overall fiscal deficit will increase from the programmed GHS18.9 billion (4.7% of GDP) to GHS30.2 billion (7.8% of revised GDP).
Also, the primary balance will correspondingly worsen from a surplus of GH?2.811 billion (0.7% of GDP) to a deficit of GHS5.6 billion (1.4% of GDP).
According to the Finance Minister, measures are, therefore, required to close the fiscal gap of GHS11.4 billion (2.9% of revised GDP).
“Since we are faced with extraordinary circumstances which require extraordinary measures, we would like to propose the following measures for the consideration and support of the House”, Mr Ofori-Atta revealed.
The measures include to lower the cap on the Ghana Stabilisation Fund (GSF) from the current US$300 million to US$100 million in accordance with Section 23 (3) of the Petroleum Revenue Management Act (PRMA).
This measure, he believes, will enable the excess amount in the GSF account over the US$100 million cap to be transferred into the Contingency Fund, consistent with Section 23 (4) of the PRMA.
The amount transferred into the Contingency Fund will be used to fund the Coronavirus Alleviation Programme (CAP). Through this process, an estimated GHS1.250 billion will be transferred into the Contingency Fund to Fund the CAP.
Others are an arrangement with the Bank of Ghana to defer interest payments on non-marketable instruments estimated at GHS1.22 billion to 2022 and beyond, as well as adjust expenditures on Goods & Services and Capex downwards by GHS1.248 billion, secure the World Bank DPO of GHS1.71 million and obtain the IMF Rapid Credit Facility of GHS3.145 billion.