The Ministry of Finance (MoF) has suggested to President Akufo-Addo not to assent to Proper Human Sexual Rights and Ghanaian Family Values (Anti- LGBTQ+ Bill) because it will have enormous implications on the Ghanaian economy.
The Parliament of Ghana passed the Bill on February 28, 2024 and is yet to be forwarded to the President for assent.
But the MoF has recommended to him (President) to hold on, following a meeting with key stakeholders to ascertain the immediate impact it would have on the economy.
It recommended that the President may have to defer assenting to the Bill, until the court rules on legal issues tabled by key national stakeholders, including Civil Society Organisations and CHRAJ.
The Finance Ministry explained that assenting to it will have serious “implications on World Bank funded programmes, implementation of the 2024 Budget, IMF programmes, Debt Restructuring programmes and African Development programmes, as well as possible adverse reactions from Germany and the wider European community.”
Headed “Brief in the immediate impact on the implementation of the 2024 Budget – March 2024”, the Finance Ministry report mentioned some of the implications in assenting the Bill into law.
Summarising the deliberations in a report, the Ministry of Finance said that the Bill, when passed, will have an impact on World Bank funded programmes, mentioning the US$300 million financing from the First Ghana Resilient Recovery Development Policy Operation (Budget Support), which is currently pending before Parliamentary approval, might not be disbursed by the Bank when it is approved by Parliament.
“On-going negotiations on the Second Ghana Resilient Recovery Development Policy Operation (Budget Support) amounting to US$300 million may be suspended; On-going negotiations for US$250 million to support the Ghana Financial Stability Fund may be suspended; Disbursement of undisbursed amounts totalling US$2.1 billion for on-going projects will be suspended and Preparation of pipeline projects and declaration of effectiveness for two projects, totalling US$900 million may be suspended”, the report stated.
According to the Ministry, Ghana is likely to lose a total US$3.8 billion in World Bank Financing over the next five to six years and explained further that Ghana will lose US$600 million budget support and US$250 million for the Financial Stability Fund for 2024, which 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.
On the implementation of the 2024 Budget, the MoF said the potential loss of these financial resources will 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.
It said failure to heed the recommendation, the Government’s ability to achieve the targets in the 2024 Budget will be undermined and the IMF-ECF Programme will be derailed.
The report also said 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.
The ministry argued that the non-disbursement of the Budget Support from the World Bank will derail the IMF programme and in turn trigger a market reaction, which will affect the stability of the exchange rate.
The passage of the Bill, the Finance Ministry said, will impact on Debt Restructuring Programme because negotiations with the Official Creditor Committee (OCC) and Eurobond holders under Ghana’s debt restructuring programme is predicated on the success of the IMF programme, hence a derailed IMF programme will have dire consequences on the debt restructuring exercise and Ghana’s long term debt sustainability.
The MoF feared the possible adverse reaction from Germany and the wider European Community because MoF officials have been informed in several discussions, with officials from the German Government, that the German Government is against the passage of the Bill and that given Germany’s relative strong influence in the European Union and the Official Creditor Committee, there was the need to manage the relationship to forestall a strong negative reaction.
The Ministry of Finance maintained that the passage of the new Bill calls for fortifying local financial systems, strengthening African financial institutions as well as our development journey in partnership with other countries.
It noted that in line with the Ghana Beyond Aid Agenda, Ghana can navigate the complexities of international relations and emerge with a robust, resilient economy with Ghanaian ownership of the commanding heights of the economy.
It has, therefore, recommended for the Presidency level that 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 and to build a stronger coalition and a framework for supporting key development initiative that are likely to be affected.
It further recommended an effective engagement with conservative countries, including the Arab countries and China to help trigger resources to fill in the potential financing gaps to be created.
The MoF assured that it will continue to engage with the IMF on the alternative credible sources of funding that will plug the financing gap. It suggested that the GRA embarks on a vigorous revenue mobilisation drive focusing on implementation of approved measures as well as compliance while considering a possible expenditure rationalisation to accommodate the shock from the potential withdrawal of resources to leverage on the Ghana Beyond Aid Principles and change the structure of our resource mobilisation.
It said the government must improve our domestic resource mobilisation efforts by working towards our medium-term tax revenue to GDP target of 17%-18% and eventually wean ourselves off the unsustainable dependency on development assistance.
