Budget review needed – Mahama, on coronavirus stimulus package

Apart from briefing Parliament on the potential impact of the coronavirus pandemic on Ghana’s economy and the impact it is having on global supply chains and trade, Ghana’s Finance Minister Ken Ofori-Atta must present a Budget Review to the House “outlining government’s new spending priorities in the light of the new developments”, former President John Mahama has suggested.

He also proposes that the “necessary appropriations” are made “to secure the necessary logistics and to mount a robust public awareness campaign on how to prevent the spread of the disease” which has killed five people out of the one hundred fifty-two cases confirmed in Ghana of which two have fully recovered.

Mr Mahama made these suggestions when he was joined by the Chief Imam and his entourage for Friday Prayers last week.

Additionally, the flag bearer of the National Democratic Congress said there was the need for “an economic package that is administered transparently without the usual, parochial and partisan considerations” so as “to cushion Ghanaian businesses and SMEs”.

“Clearly”, Mr Mahama said, “businesses, especially in the tourism and hospitality sector, are already struggling quite early into this pandemic”.

“As we have seen around the world, governments are outdooring bold steps and initiatives to protect their economies. Our economy does not exist in isolation”, he observed, noting: “We have a country to protect, we have our fellow Ghanaians to protect. We all have a role to play, not just the government”.

Mr Mahama also reiterated the need to act while the country prays to God for deliverance from the ravages of the virus.

“When you read Quran chapter fourteen verse sixty, Allah says: ‘Call me and I will respond’. … But as I said last Sunday, even as we pray, we must act”, he insisted.

The former President borrowed a leaf from the Hadith to buttress his point.

“There’s a story in the Hadith”, he narrated, “Where a man got down from his camel and did not tie the camel down; then the Holy Prophet asked him why he didn’t tie the animal and he said: ‘I have Allah watching over it for me’, and the Prophet said: ‘Go and tie the animal first before seeking the help of Allah’. This Hadith teaches us to pray but at the same time to work and apply common sense to whatever we do”.

He urged calm among Ghanaians despite the spread of the virus having caused panic among the populace.

In his view, “In addition to a concerted effort to provide regular, accurate and timely information, the government must also work extra hard to ensure the implementation of adequate community mitigation measures”, adding: “We also need to urgently strengthen the public health management procedures and provide the needed resources and logistics for managing this pandemic. This is critical if our frontline healthcare workers are to have the confidence to continue to battle this disease”.

When he appeared before Parliament on Monday, Mr Ofori-Atta told the House that the total estimated fiscal impact, as a result of the coronavirus pandemic, is estimated at GHS9.5 billion (2.5% of revised GDP).

This is 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.

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 GHS2.811 billion (0.7% of GDP) to a deficit of GHS5.6 billion (1.4% of GDP).

According to Mr Ofori-Atta, 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.

Both Mr Ofori-Atta and the President have also announced a GHS1 billion stimulus package for small scale enterprises and households.