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WHAT DID FINANCE MINISTER KEN OFORI-ATTA TELL PARLIAMENT TODAY ON GHANA FINANCIAL PLAN IN THE COVID19 ERA & BEYOND

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Here are some things to note in his address.

1. He started by talking about how the disease has affected the global economy with major economies virtually on their knees. The global economy is on the verge of recession despite several interventions.

2. The situation in Ghana is not different. Economic growth which government projected at 6.8 percent could fall as low as 1.5 percent if the partial lockdown is aggravated to a full lockdown.

3. According to Ken, the COVID-19 situation is going to directly affect government’s oil revenue, tax revenue, increased health expenditure and cost of borrowing.

4. In sum, government will lose about GHS7.9 billion (US$1.4 billion) in revenues as result of the effect of the coronavirus.

Also, government will commit an additional GHS1 billion to the Coronavirus Alleviation Programme announced by Akufo-Addo. This brings to a total of GHS9.5 billion as the fiscal impact of COVID-19.

5. To bridge this shortfall, government will withdraw more than $200 million from the Ghana Stabiliation Fund ie the fund set up to provide government cushion when oil prices disappoint.

Currently, the fund has a balance of $391 million. The minimum operating balance set by law is $300 million. Parliament will thus revise the cap to $100 million allow the withdrawal.

6. In addition, government will cut down on its expenditure on goods and services and spending on infrastructure dev’t; secure funds from World Bank and IMF and also cut down allocation to GNPC.

7. For the first time in our history, we seeking to withdraw funds from the Heritage Fund, the portion of oil revenue set aside for future generations.

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The fund has nearly $600 million in its account. As to how much will be withdrawn wasn’t stated. But certain amendment to the Petroleum Revenue Management Act must be done.

8. For businesses, government will seek to raise a GHS3 billion credit for onward lending to other sectors of the economy that can rapidly turn around in these trying times.

9. The GRA, too, is pursuing a number of reliefs for businesses and households. For instance the permission of the deduction of contributions and donations towards
COVID-19 as allowable expense for tax purposes.

10. Overall, the government is betting on the partial lockdown not to degenerate into a full blown one which will have massive repercussions. But as things remain, government is upbeat of restoring macroeconomic growth once the virus is defeated. No timelines were provided though.

But as always, maintain a social distance of at least 1 meter, wash your hands with soap under running water and use alcohol based hand sanitizers as frequent as possible.

#STAYSAFE

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