Ghana's is expected to lose about GH¢15.85 billion in revenue as a result of the coronavirus pandemic, a report from the Ministry of Finance states.
The nation is targeting about GH¢67 billion in revenue (tax and non-tax) for this year.
According to the Finance Ministry, Ghana's fiscal gap as a result of the COVID-19 will hit about GH¢21.42 billion.
This is made up of Revenue Shortfall Impact of GH¢15.85 billion and COVID-19 related expenses of GH¢ 5.57 billion.
Due to this, the government submitted to Parliament to access emergency financing of GH¢10 billion from the Bank of Ghana consistent with the provisions in Section 30 of the Bank of Ghana Act, 2002 (Act 612), as amended.
The Bank of Ghana has however released the first tranche of the facility amounting to GH¢5.5 billion to the Ministry of Finance on 15th May 2020.
The Finance Ministry stated that the unprecedented COVID-19 pandemic is posing significant challenges to the fiscal operations of Government and more generally on the implementation of the 2020 Budget through shortfalls in revenues, additional emergency spending, and tight financing conditions.
The revenue shortfalls emanate mainly from petroleum revenue shortfalls through plunging crude oil prices; shortfalls in import duties and other taxes; and shortfalls in non-tax revenues, significantly affecting the cash flows for the year and at the same time posing a threat to containing the pandemic.
In the wake of the COVID-19 pandemic, the current domestic market conditions have reduced liquidity on the market.
Since the beginning of the year, there have been sell-offs by non-resident investors, which has heightened these liquidity constraints. Therefore, financing the residual gap would not only significantly increase domestic interest rates but would be counterproductive by denying the private sector access to cheaper sources of financing.
Global financing conditions have also worsened as investors have negative sentiments towards emerging markets. As a result, the international capital markets remain largely closed to emerging market issuances.
So far, the government has received the IMF Rapid Credit Facility of US$1.0 billion, the World Bank DPO of US$350 million and Stabilisation Fund of US$219 million.