Ghana’s GDP Likely To Shrink From 6.8% To 2.6% Due To Covid-19

Finance Minister, Ken Ofori-Atta, has warned that the coronavirus pandemic could potentially lead to a massive shrink in the country’s Gross Domestic Product.

Addressing Parliament, he said the shrinkage could be as high as 4.2%.

“Even though events on the coronavirus pandemic are still unfolding, a preliminary analysis of the impact of the Coronavirus menace on the real sector shows that the 2020 projected real GDP growth rate could decline from 6.8% to 2.6% with an outbreak and 1.5% with a partial lock-down Mr. Speaker, the projected growth will further worsen in the event of full lock-down.”

The shrink in GDP will directly be due to slow down in economic activities due to the fact that people will have to stay away from work.

As part of the consequences, he warned that jobs would be lost.

The Finance Minister painted the scenario ton Parliament to back a request for approval to access Ghc1billion to set up an alleviation program for businesses so that the negative impact of the pandemic is minimized.

Covid-19, he said will also have serious negative impact on the fiscals of the country shortfall in crude oil receipts amounting to GHȼ5,679 million.

“the corresponding projected shortfall in Annual Budget Funding Amount (ABFA) is GHȼ3,526 million; while shortfalls in the Ghana Stabilisation Fund and the Ghana Heritage Fund are GHȼ1,058 million and GHȼ453 million, respectively. Projected shortfalls in transfers to GNPC is GHȼ642million,” he said.

He said Government programmed a crude oil price of US$62.60 per barrel for the 2020 Budget, consistent with the PRMA (Act 815). However, Global crude oil price has, declined significantly since the outbreak of the coronavirus. “As at 30th March 2020, crude oil prices (Brent) were down to US$22.9 per barrel from the December 2019 price of US$65.9 per barrel. Preliminary analysis shows that at an average crude oil price of US$30 per barrel for year 2020, Government will register.”

Also, he said, “preliminary analysis shows that import duties will fall short of target by GHȼ808 million for the 2020 fiscal year.”

For the petroleum sector, he said the total estimated fiscal impact from the shortfall in petroleum receipts, shortfall import duties, shortfall in other tax revenues, the cost of the preparedness plan, and the cost of Coronavirus Alleviation Programme is GHȼ9,505 million (2.5% of revised GDP).