The Economist Intelligence Unit (EIU) has said the Ghana Government might struggle to handle the financial pressures caused by the COVID-19 pandemic.
The coronavirus fallout, according to the EIU will also affect Ghana in areas such as tourism, inflows of foreign direct investment, international trade in terms of both export receipts and imported goods and the availability of financing domestic and external debt.
In a report issued today, Thursday, April 23, 2020, the business intelligence unit indicated that per its findings: “The coronavirus has already infected over 50 African countries. Ghana has lagged behind most other areas of the world with the onset of the infection and is still at the early stages. Nonetheless, the comparatively weak state of its national healthcare system (compared with those in developed countries)—including a shortage of capacity for screening, testing and quarantining suspected cases—leaves it vulnerable to significant socioeconomic fallout.”
It continued to argue that the government’s original fiscal projections for 2020 have been thrown into disarray by the global pandemic.
“Meanwhile, the Ghanaian economy is already set to suffer a significant blow as a result of the depressive effect of the virus on global oil demand and prices. We expect global oil prices to slump to an average of US$32.1/barrel in 2020 and to remain low, at an average of US$36.3/b, in 2021. In addition, a UK based oil company, Tullow Oil the operator for both the Jubilee and the TweneboaEnyenraNtomme (TEN) fields in Ghana—is continuing to face operational and financial problems”, the EIU noted.
Impact of Coronavirus on Ghana’s economy
The novel coronavirus pandemic is set to cost Ghana GHS9.505 billion, according to Ken Ofori-Atta, the Finance Minister.
This will be 2.5 percent of Ghana’s revised GDP.
Import duties, for example, will fall short of the target of GHS808 million for the 2020 fiscal year, the Minister indicated.
The pandemic will also take a toll on Ghana’s GDP growth.
Mr. Ofori-Atta said in a preliminary analysis of the impact of the virus “on the real sector shows that 2020 projected real GDP growth rate could decline from 8 percent to 2.6 percent with an outbreak, and 1.5 percent with a partial lock-down.”
The Minister also explained that “the overall fiscal deficit will increase from the programmed GHȼ18.9 billion to GHȼ30.2 billion, which will be 7.8 percent of revised GDP.”
Ghana has also gone in for a $1 billion interest free loan from the to cushion the economy.