Government may present a new budget to Parliament by mid year due to the economic impact of the Covid-19 pandemic that has hit its revenue target for the year.
The coronavirus pandemic is causing havoc in many economies, affecting commodity prices as demand continues fall.
Prices of Gold, Cocoa, and oil have all been affected by the outbreak of the viral disease spreading across continents and killing both human beings and businesses.
For instance, global oil prices have dropped to $20 per barrel, the lowest in 18 years.
This, obviously will have an impact on Ghana’s revenue target set by the Finance Minister, as the Ghanaian economy does not operate in isolation.
Revenue shortfall
The Finance Minister had earlier said Ghana will record a significant drop in revenue target for the year due to the outbreak Covid-19 viral disease.
He explained that the country is recording a huge decline in revenue from imports, petroleum receipts and taxes due to economic slowdown, the world over, in the wake of the covid-19.
He stated that import duties will, for example, fall short of target by GHS808 million for the 2020 fiscal year.
Government is targeting total Revenue and Grants for 2020 to reach 67.0 billion cedis.
The 2020 financial budget was targeted at expanding infrastructure, particularly in the area of roads.
But this may not materialised if innovative measures are not taken to make up for the projected revenue shortfalls.
Budget deficit
In line with this, the Finance Minister, Mr Ken Ofori-Atta, announced in Parliament on 30th Mmarch announced that government will require 9.5 billion cedis to fight the COVID-19 pandemic.
However, the situation, according to the Mr Ofori-Atta remarked may increase the 2020 budget deficit to over 7 percent.
“We have to re-look at all the fundamental assumptions of the budget, and I did signal to Parliament that come July, there would be a lot more information and analysis because what is the new normal and how do we address the thing that invariably is going to occur?
“You remember in the first budget we spoke about the preferential option for the poor, remove these taxes and let people do what they want and now we are just coming down to the bottom of the Maslow theory, and we are saying keep body and soul together. At the same time make sure infrastructure is being managed,” he said.
But addressing parliamentarians on government’s plans of containing the spread, Mr. Ofori-Atta announced that the situation will lead to an increase in Ghana’s fiscal deficit.
Covid-19 to cost Ghana GHS9.5bn
Meanwhile, Mr Ofori-Atta, has disclosed that the Cocid-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 in import duties, the shortfall in other tax revenues, the cost of the preparedness plan, and the cost of Coronavirus Alleviation Programme is GH₵9,505 million,” he said when he appeared in Parliament today, Monday.
He also stated that there will be a “fiscal gap of GH₵11.4 billion”.
