The Finance Ministry, has said its COVID-19 preliminary assessments, taking into consideration the revenue shortfall impact, direct health-related spending, additional expenditures including programmed expenditures for the Coronavirus Alleviation Programme, the payment of outstanding government claims to health-related sectors of the economy (National Insurance Trust Fund), and identified government intervention programmes, puts the fiscal gap at about GH¢ 21.42 billion (i.e. Revenue Shortfall Impact GH¢ 15.85 billion + COVID-19 related expenses of GH¢ 5.57 billion).
According to the Ministry, the current domestic market conditions in the wake of the pandemic has reduced liquidity on the market.
“Since the beginning of the year, there have been sell-offs by non-resident investors, which has heightened these liquidity constraints. Therefore, financing the residual gap would not only significantly increase domestic interest rates but would be counterproductive by denying the private sector access to cheaper sources of financing,” a statement said.
“Global financing conditions have also worsened as investors have negative sentiments towards emerging markets. As a result, the international capital markets remain largely closed to emerging market issuances.
“The identified financing measures of Government, including the IMF Rapid Credit Facility (US$1.0 billion), the World Bank DPO (US$350 million), Stabilisation Fund (US$219 million) still results in a residual financing gap of about GH¢ 17.9 billion to be sourced from both the domestic and external markets.