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Ghana's primary balance will worsen - KPMG Report

By Justice Kofi Bimpeh
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KPMG has indicated that the primary balance of the Ghanaian economy will worsen due to the Covid-19 pandemic.

KPMG in its report which focused on the economic impact and implication of Covid-19 on Ghana said "the government of Ghana anticipates that the total shortfall in petroleum receipts, import duties, tax revenues and the cost of the preparedness plan and the Coronavirus Alleviation Programme will cost the economy about GHS 9.5 billion."

But the effect of the Covid-19 will see the primary balance of the economy worsen from a surplus of GHS 2.8 billion to a deficit position of GHS 5.6 billion.

According to the report, trade volumes both domestic and international are reducing especially with China which constitutes the highest of Ghana's imports and the second-highest of Ghana's exports.

Therefore the decline in international trade will result in a reduction of expected import duties.

KPMG also estimates that the investment sector will also be greatly affected. The report noted that"in an attempt to curb the spread of the virus, travel restrictions and border shutdowns were imposed. An unintended consequence of the government's directive is the inability of foreign investors to enter the country to transact business or even undertake feasibility studies."

This trend they believe is expected to worsen as the level of uncertainty increases going forward.

READ ALSO : Covid-19 : Gov't will access IMF's $1bn from April 18 - Ken Ofori Atta

The report further proposed some measure to help reduce the negative impact of the pandemic.

On utilisation of the stabilisation fund, the report suggests that there should be a lower cap on the Ghana Stabilisation Fund from the current 300 million dollars to 100 million dollars, the amendment of the PRMA to allow a withdrawal from the Ghana Heritage Fund to undertake emergency expenditures in periods of national emergency.

Realignment of statutory funds towards expenditures that tends to mitigate the impact of the coronavirus pandemic ( sanitation and health-related expenditures) and limiting the award of new contracts whiles focusing on the payment of arrears.

Report below :