Economy | Opinion

Coronavirus: No budget space for major fiscal stimulus

The first call on Government of Ghana to go to Parliament was in an article “Reading IMF between the Lines” after the IMF Board’s Statement on the 2019 Article IV consultations.

It called for the correction of parallel numbers on the economy, as presented in the 2020 Budget and what GOG authorized for the Board—while the House was debating the Budget.

The second was when President Akuffo-Addo directed payments to depositors affected by the banking crisis. This seemed ultra vires since the 2020 Budget has no provision to pay such substantial bailout costs—not even as memorandum, as GOG now uses to sidestep well tested fiscal rules for exceptional expenses. Without heeding the call, the Receiver has started cash payments and bond issuance worth about Ghc5 billion to them.

This third call relates to the proper assessment of the impact of Corona (COVID-19). The President asked MOF to set aside US$100 million (about Ghc560 million) to support the Ministry of Health and allied agencies—without a budget and, as the Minister admitted, in anticipation of IMF, World Bank and donor contributions in a Beyond Aid era.

At this juncture, a comprehensive Statement to Parliament has precedent and is prudent and proactive, as advanced, emerging market (EM), and low-income states are doing with fiscal, monetary, and real sector measures. The process is ongoing in the US Congress and Senate.

Part I deals with the delicate fiscal situation while Part II examines missed opportunities in continuing to use the petroleum funds to build sound and sufficient fiscal buffers.

Read the full Part I below.


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