US$5bn needed to revive economy post-coronavirus - Minority Leader

The country will need US$5bn or more to put the economy on the road to recovery after the coronavirus pandemic, Minority Leader Haruna Iddrisu has suggested.

Ghana’s legislature last week approved the US$1billion Rapid Credit Facility (RCF) from the International Monetary Fund (IMF) to support the country’s efforts to tackle the pandemic and its economic repercussions.

The purpose of the IMF’s RCF is to provide rapid and concessional financial assistance to low-income countries facing an urgent balance of payments need, without ex-post conditionality.

Out of the US$1bn loan, which is equivalent to GH¢5.5bn, GH¢1bn will be used to finance the electricity subsidy announced by the President. The remainder of the cash will be employed towards expenditure outlined in the 2020 Budget.

According to the Minority Leader, the US$1bn RCF is not adequate to confront the country’s economic challenges.

“A billion dollars is just not going to be enough for post-COVID. For Ghana’s economy to recover, I estimate that the country will need not less than five billion United States dollars just for the management of the Ghanaian economy in terms of loss of revenue arising out of it,” he told Parliament when members approved the facility.

The government intends to use the funds to help close the financing gap that has been created by the pandemic as a result of shortfalls in revenues and additional expenditures to fight the COVID-19 pandemic.

However, Mr. Iddrisu advised the government to not narrow the utilisation of the funds to budget support, but to consider providing some of it for balance of payments support, since this “will affect the cushioning of the cedi” given the pressures on the exchange rate arising out of the current challenges.

He also urged the government to detail adequate plans for supporting ailing companies, arguing that companies are struggling to pay workers and may go bankrupt.

“Per the country’s tax laws, companies are required to file their tax returns by end of April, but naturally they will not be able to do so; are we granting them tax amnesty in order to extend the duration for companies to be able to file their returns and file accordingly their tax obligations to the state?” he wondered.

The coronavirus outbreak has hit Ghana’s economy hard, and even though the government has lifted the partial restrictions on the movement of persons, which has allowed businesses to bounce back, economic growth is still expected to fall sharply to 1.5 percent, the lowest in almost four decades.