As the covid-19 lingers on, many economists and researchers are assessing the impact the deadly pandemic on life and business.
The latest to join this fray is the KPMG, an auditing firm. They conducted a study on the effect of the viral disease on the economy of Ghana and the report was released recently.
The KPMG report indicated that the primary balance of the Ghanaian economy will worsen due to the Covid-19 pandemic.
Primary balance
The KPMG report says the effect of the Covid-19 will see the primary balance of the economy deteriorate from a surplus of GH₵2.8 billion to a deficit position of GH₵5.6 billion.
“The government of Ghana anticipates that the total shortfall in petroleum receipts, import duties, tax revenues and the cost of the preparedness plan and the Coronavirus Alleviation Programme will cost the economy about GHS 9.5 billion’, portions of the report stated.
Trade volumes
Additionally, the report predicted that Ghana’s trade volumes both domestic and international will reduce significantly, adding that decline will also result in a reduction of expected import duties.
Again, the KPMG report adds that investments in the country will also be significantly affected due to the travel restrictions as imposed by the Government as part of measures to contain the virus.
“In an attempt to curb the spread of the virus, travel restrictions and border shutdowns were imposed. An unintended consequence of the government’s directive is the inability of foreign investors to enter the country to transact business or even undertake feasibility studies.”
This, they believe, will get even more worse as the level of uncertainty increases going forward.
Food shortage
Part of the KPMG report which focused on the impact of the pandemic on Agriculture mentions that the country could be hit with a food shortage should the disease prolong.
This, could lead to a shortage in food supply and general inflation of food prices.
“The general agriculture sector is also expected to experience an adverse disruption in the supply chain coupled with lower demand activities”, it predicted.
Proposals
The report further laid proposals before the Government to help it mitigate the impact of the pandemic on the economy.
The KPMG report suggested that there should be a lower cap on the Ghana Stabilisation Fund from the current 300 million dollars to 100 million dollars.
It also proposed an amendment of the Petroleum Revenue Management Act 815, to allow a withdrawal from the Ghana Heritage Fund to undertake emergency expenditures in periods of national emergency.
This implies a readjustment of statutory funds towards expenditures in order to mitigate the impact of the coronavirus pandemic on expenditure on sanitation and health.
They also cautioned against award of new contracts at this time whiles focusing on the payment of arrears.
