The Finance Minister, Mr Ken Ofori-Atta, has disclosed that the Covid-19 pandemic will cost Ghana GH₵9.505 billion.
According to him, the figure represents 2.5 percent of Ghana’s revised Gross Domestic Product.
“Speaker, the total estimated fiscal impact from the shortfall in petroleum receipts, shortfall import duties, the shortfall in other tax revenues, the cost of the preparedness plan, and the cost of Covid-19 Alleviation Programme is GH₵9,505 million,” he said when he appeared in Parliament on monday Monday 30th March.
He said there will be a “fiscal gap of GH₵11.4 billion”.
Additionally, he says, import duties will fall short of the target by GH₵808 million for the 2020 fiscal year.
The Finance Minister made these remarks on Monday, March30, 2020 when he appeared before Parliament to seek approval for the amendment of the Petroleum Revenue Management Act to pave the way for Government to touch the Heritage Fund, which has been set aside to support future generations.
The move is to enable Government raise revenue to combat the coronavirus pandemic.
“Amend the PRMA to allow a withdrawal from the Ghana Heritage Fund to undertake emergency expenditures in periods of national emergency.
“There is an estimated US$591.1 million in the Ghana Heritage Fund,” the Finance Minister told Parliament on Monday.
The Minister is also seeking the support of Parliament to amend the relevant laws to lower the cap on the Stabilization Fund from $300 million to $100 million.
This will enable the government utilise the excess funds to bridge the revenue gap created by the economic impact of the pandemic.
“This measure will enable the excess amount in the GSF account, over the US$100 million cap, to be transferred into the Contingency Fund, consistent with Section 23 (4) of the PRMA.
‘The amount transferred into the Contingency Fund will be used to fund the Coronavirus Alleviation Programme (CAP), Mr Ofori-Atta said.
Through this process, he added, an estimated GH₵1.25 million will be transferred into the Contingency Fund to Fund the CAP.
“Mr. Speaker, we therefore wish to seek approval from this August House for the Finance Minister to use the Funds which will be available in the Contingency Fund to fund the Coronavirus Alleviation Programm,” the Finance Minister requested.
But the Minority in Parliament disagreed with the decision to withdraw from the Heritage Fund, insisting it is not yet time for Government to touch the Fund.
They argue that there are other alternative sources of revenue that the government could fall on to fight the Covid-19 viral disease.
“There is no difficulty in giving Finance Minister approval to use the stabilization Fund, but what we are saying is that the Heritage Fund was set out for a purpose and we are not there yet.
“So, make use of the stabilization reserve to support your activities and not the Heritage Fund,” The Minority Leader Mr Haruna Iddrisu remarked.
The Heritage Fund
The Heritage Fund is a creation of section 10 of the Petroleum Revenue Management Act 815 enacted in 2011.
The purpose of the establishment of this fund is to provide an endowment to support the development of future generations when the petroleum reserves have been depleted according to Act 815 (2011) and amended Act 893 (2015).
The fund receives a percentage of oil revenue accrued to the Petroleum Holding Fund.