The lifting of partial lockdown: Economics triumph over health

The president has lifted the partial lockdown imposed in some part of the country. Many people are jubilating and a lot more are disappointed. Everybody see this decision from their personal circumstances and may be patriotic concerns.

This decision, especially at this time, is likely to have an indelible mark on the country for a long time. Hopefully, President Nana Addo would go down in history as very forthright in his decision or the father who opens his door to allow his children to go out to face the lion unprepared.

The decision to continue to the lockdown or not is a difficult one. Both have serious consequences. This decision is an economic one as much as it is a health one.

The government projected total revenue of GHS67.1 billion in the 2020 budget statement. This is made up of, among other variables, the total tax revenue of GHS49.2 billion and total oil revenue of GHS 8.9 billion.

The government pegged its oil revenue expectation on an estimated Brent crude price of USD62.6 per barrel. Already, Brent crude is around $27 per barrel and threatening to go down further. The drop in oil prices will adversely affect government oil revenue. There is an expectation of about 53% drop in oil revenue this year.

More starkly, the Infrastructure development government intends to roll out this year will be significantly affected as about 80% of government domestic revenue for capital budget is to be sourced from the Annual Budget Funding Account (ABFA) which is heavily dependent on oil revenue. Again, revenue from import duties and tax revenues are expected to fall.

As the government struggles to meet its revenue expectations, its expenditure continues to increase above expectation. Our interest on loan repayments (GHS18.6 billion) and salary payment (GHS22.9 billion) together constitute about 63% of our initial revenue projections for 2020. There is also an increase in unbudgeted health care and social expenditure due to the COVID-19 outbreak.

The president is clearly torn between saving the economy by hoping we would voluntarily adhere to precautionary measures outlined or continue to enforce the lockdown to save lives and cripple the economy of the country. The government took an economic decision not a health one. May posterity prove him right, otherwise kotakotakota by June di33 na obia ewu dadada.