Ghana Cuts GDP Growth Forecast to 37-Year Low on Coronavirus
Ghana’s Finance Minister Ken Ofori-Atta cut the country’s economic growth forecast for 2020 to the lowest in 37 years due to the collapse in oil prices and the impact of the coronavirus.
Growth in gross domestic product could slow to 1.5% with a partial lockdown of the economy and may “further worsen in the event of full lockdown,” Ofori-Atta told lawmakers Monday in the capital, Accra, according to a copy of his speech. The estimate compares with the government’s initial projection of 6.8% and will be slowest since the economy contracted in 1983, when the West African nation was under military rule, data from the International Monetary Fund show.
The virus is bringing an abrupt end to three years of GDP expansion of 6% or more, with a 14-day lockdown that started Monday in the biggest cities to avoid a mass outbreak. The country has registered 152 confirmed cases and five deaths since the first detection of the disease on March 12.
“The reason why every single person in this country must exercise the highest level of self discipline is evidently clear in the economic numbers,” Ofori-Atta said. The greater the level of self discipline and responsibility that citizens maintain, “the greater chances we have in avoiding mass job losses and its concomitant hardships,” he said.
The government expects a 5.7-billion cedi ($989 million) shortfall in oil receipts and a further gap of 2.3 billion cedis from lower tax revenues and duties, said Ofori-Atta. This will widen the targeted budget deficit to 6.6% of GDP from an initial forecast of 4.7%, even after adopting “extraordinary measures” to close the gap, he said.
The measures include a deferral of interest payments on non-marketable bonds and securing an emergency IMF facility of 3.1 billion cedis, he said. The government will also propose a change in legislation to allow borrowing of as much as 10% of the previous year’s tax revenue from the central bank “in the event of tight financing conditions.”
Ghana’s debt increased to 218 billion cedis, equivalent to 63% of GDP as of December 2019, from 173.1 billion cedis, or 57.6% of GDP, a year earlier.
©2020 Bloomberg L.P.