Government estimates the economy will record a loss of not less than GHȼ9,505 billion this year due to the coronavirus pandemic.
The figure represents 2.5% of the country’s revised Gross Domestic Product (GDP), Finance Minister, Ken Ofori Atta announced while briefing Parliament on the measures taken by government to mitigate the likely impact the coronavirus pandemic.
“Mr. Speaker, the total estimated fiscal impact from the shortfall in petroleum receipts, shortfall import duties, shortfall in other tax revenues, the cost of the preparedness plan, and the cost of Coronavirus Alleviation Programme is GHȼ9,505 billion (2.5% of revised GDP),” the Minister told the House, Monday, March 30, 2020.
The anticipated decline in import volumes and values, as well as the slowdown in economic activities, will lead to shortfalls in both import duties and other tax revenues, he acknowledged.
President Akufo-Addo in a national address Friday, declared a two-week partial lockdown in parts of Greater Accra and Kasoa in the Central Region as well as the Ashanti Regional capital, Kumasi. This is to curb the spread of the coronavirus also known as COVID-19.
To address the negative impact the pandemic is likely to have on the economy following the lockdown, the government outlined a number of measures to cushion the economy against any shocks the economy might experience. These include the establishment of a Coronavirus Alleviation Programme (CAP).
The CAP will focus on areas that will provide maximum results in alleviating the impact of the coronavirus pandemic with a focus on protecting against job losses, protecting livelihoods, supporting small businesses, and ensuring the programme is efficiently and sustainably implemented.
It will also seek additional funding for the promotion of selected industries to shore up production for export and import substitution, to support SMEs and create jobs, to partner with Pension Funds and Insurance Funds to create guarantees and first loss instruments.
The Finance Minister told the House that his Ministry plans to immediately release an amount of GHȼ1 billion upon approval by Parliament.
“The Ministry is proposing to use the equivalent of USD 219 Million from the Stabilisation Fund,” he added.
He also announced 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 GHȼ18.9 billion (4.7% of GDP) to GHȼ30.2 billion (7.8% of revised GDP).”
“The primary balance will correspondingly worsen from a surplus of GHȼ2,811 billion (0.7% of GDP) to a deficit of GHȼ5.6 billion (1.4% of GDP). Mr. Speaker, measures are, therefore, required to close the fiscal gap of GHȼ11.4 billion (2.9% of revised GDP),” he said.