The Ministry of Finance has planned a structured engagement with local conservative forces such as religious bodies and faith-based organisations to communicate the economic implications of the passage of the anti-LGBTQ+ Bill on the national budget, proposing a total shift to China and Arab countries as development partners.
The action, government sources contend, has become one of the pragmatic options available to the country, with the ministry projecting a grim economic outlook enforced by uncertainty of financial inflows from foreign sources in the wake of the posturing of Western forces and Western-backed financial institutions.
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A Ministry of Finance internal memo, sighted by the Daily Graphic, has projected, for instance, that Ghana could lose up to $3.8 billion in World Bank financing over the next six years.
For 2024 alone, the memo states that “Ghana will lose $600 million budget support and $250 million for the Financial Stability Fund” and adds that “this will negatively impact on Ghana’s foreign exchange reserves and exchange rate stability as these inflows are expected to shore the country’s reserve position” Government’s dilemma is founded on the unfavourable commentary from the country’s external financial support sources, notably Western nations.
With the US, especially, and the UN criticising the passage of the Bill, the West signalled its disapproval of a law that criminalises uncultural sexual tendencies and orientations, arguing the issue on the basis of human rights.
The memo, consequently, stressed the need for an effective engagement with conservative countries, notably the nations in the Middle East and China, as alternative financial support sources to trigger resources to fill the potential financing gaps.
The recommendations contained in the memo followed an emergency meeting convened by the Minister of Finance, Dr Mohammed Amin Adam, following the passage of the Proper Human Sexual Rights and Ghanaian Family Values.
The minister convened the emergency meeting with chief director and directors of the ministry, the governor and first deputy governor of the Bank of Ghana and the commissioner-general of the Ghana Revenue Authority (GRA) to ascertain the immediate impact of the passage of the Bill on the implementation of the 2024 Budget.
Implications
On the impact on World Bank-funded programmes, the memo said the expected $300 million financing from the First Ghana Resilient Recovery Development Policy Operation, a budget support, which is currently awaiting parliamentary approval, might not be disbursed by the World Bank when it was approved by the legislature.
“Ongoing negotiations on the Second Ghana Resilient Recovery Development Policy Operation (Budget Support) amounting to $300 million may be suspended; ongoing negotiations for $250 million to support the Ghana Financial Stability Fund may be suspended,” it said.
It said the disbursement of undisbursed amounts totalling $2.1 billion for ongoing projects would also be suspended, and that preparation of pipeline projects and declaration of effectiveness for two projects worth $900 million may be suspended too.
Budget implementation
The report indicated that the potential loss of those financial resources would create a financing gap in the 2024 Budget that must be addressed either through a significant reduction in the expenditures or additional domestic revenue mobilisation.
Failing this, it said, government’s ability to achieve the targets in the 2024 Budget would be undermined, and the International Monetary Fund-Extended Credit Facility (IMF-ECF) programme would be derailed.
“While there is no direct conditionality in the IMF-ECF Programme relating to the passage of the Bill, the principles of the current IMF-ECF programme are built on predictable financing from development partners (financing assurances), including the World Bank-funded Ghana Resilience Recovery Development Policy Operations.
“Hence the non-disbursement of the budget support from the World Bank will derail the IMF programme.
This will in turn trigger a market reaction which will affect the stability of the exchange rate,” it said.
Source: GraphicOnline
