Finance Minister Ken Ofori-Atta says the impact of the ravaging coronavirus pandemic on Ghana’s economy looks grim, however bold measures must be taken for desired mitigation.
While updating Parliament Monday on the potential economic impact of the coronavirus on the economy and the measures government is taking to mitigate the impact, Ken Ofori-Atta said “preliminary analysis of the macro-fiscal impact of the pandemic shows that there is likely to be a significant slowdown in our GDP growth, significant shortfalls in petroleum revenues, shortfalls in import duties, shortfalls in other tax revenues, increased health expenditures, and tighter financing conditions with consequences on the 2020 Budget.”
He said never in the history of the Fourth Republic, had the entire Ghanaian economy and society experienced such severe external shock such as the Covid-19 presents.
‘“Certainly, never before, since Independence, has the Ghanaian economy faced such a sudden, dramatic all-round reduction in widespread consumer and corporate demand as a result of a single health crisis. The situation is not homemade. But, as the President said in one of his addresses to the nation since the coronavirus outbreak, “our survival is in our hands.”’
Click to download pdf of Finance Minister Ken Ofori-Atta's address to parliament
Ken Ofori Atta said one way out to mitigate the tide, is for the country to take the opportunity it presents to boost domestic production and consumption of some food commodities, such as rice, maize, cassava, yam and chicken, using the opportunity to increase the production and export of commodities for which the country has comparative advantage in to trade within the West African region, among countries that have not closed their borders to cargo.
But listing some of the undesirable impact, the Finance Minister said since the outbreak of the coronavirus, there has been a significant decline in the international price of crude oil as result of the fall in demand, with crude oil prices declining from US$63.21 a barrel in November 2019 to US$22.9 per barrel as at 30th March 2020.
He said the sharp decline in crude oil prices will result in significant shortfalls in petroleum revenue for the 2020 fiscal year, while there has also been a decline in cocoa prices from US$2,440 MT in December 2019 to US$2,253 MT as at 30th March, 2020.
He said consumers of petroleum products across Ghana are, however, likely to benefit from the decline in international price of crude oil as the ex-pump price of petroleum is likely to reduce.
Again, he said the increased demand for Gold as a safe haven as a result of the virus outbreak will likely impact positively on the balance of payments and receipts from mineral royalties. Gold prices have increased from US$1,479/toz in December 2019 to US$1,621.6/toz, an increase of 9.6% as at 30th March 2020.