Finance Ministry charges gov’t to rationalise expenditure to accommodate shocks from potential withdrawal of World Bank resources

The Ministry of Finance has proposed to government to rationalise expenditure to deal with shocks from the potential withdrawal of World Bank resources if President Akufo-Addo assents the LGBTQ+ bill into law.

In a paper sent to the Present, the Finance Ministry has warned that assenting the bill into law will come with consequences.

The Ministry in its paper said Ghana is likely to lose US$3.8 billion in World Bank Financing over the next five to six years if the bill becomes law.

The Ministry also said that in 2024, Ghana will lose US$600 million in budget support and US$250 million for the Financial Stability Fund.

This, the Ministry explained will negatively impact Ghana’s foreign exchange reserves and exchange rate stability as these inflows are expected to shore up the country’s reserve position.

To ensure the country does not suffer, the Ministry of Finance has proposed expenditure rationalisation to accommodate the shock from the potential withdrawal of resources.

The Ministry further recommended a change in the structure of the country’s resource mobilisation while urging government to leverage the Ghana Beyond Aid principles.

“As a nation, we must improve our domestic resource mobilisation efforts, working towards achieving our medium-term tax revenue to GDP target of 17%-18%,” the Finance Ministry proposed.

The Ministry noted that Ghana can leverage enhanced revenue mobilisation, expenditure rationalisation, and strategic resource mobilisation, to plug the financing gap that may result from the passage of the Bill.

“However, this will not be an easy path in the short term, given the significance of the amounts at stake and the importance of the upcoming disbursements for immediate budget support. This is against the backdrop of recent macroeconomic vulnerabilities and the cascading effect of exchange rate volatility on prices of goods and services and inflation.

“Further, the success of this path will depend greatly on stronger revenue mobilization and expenditure cuts; hand-in-hand policy directions which have evoked very strong reactions from Ghanaians in recent times.

“Taking a long-term view, the passage of the new Bill ultimately calls for the strengthening of domestic and African financing sources, as well as the re-engineering of our development journey in partnership with other countries. In line with the Ghana Beyond Aid Agenda, Ghana can navigate the complexities of international relations and emerge with a robust, resilient economy characterized by greater Ghanaian autonomy concerning the financing thereof,” the Finance Ministry explained to the President.