Ghana

A breakdown of the financial implications of the Anti-LGBTQ Bill

The Ministry of Finance has disclosed that Ghana is likely to lose US$3.8 billion in World Bank Financing over the next five to six years if President Akufo-Addo assents to the Anti-LGBTQ Bill.

According to the Finance Ministry, for 2024 Ghana will lose US$600 million in Budget support and US$250 million for the Financial Stability Fund which will negatively impact Ghana’s foreign exchange reserves and exchange rate stability.

Below is the full breakdown

Impact on World Bank-funded programmes

i. The expected US$300 million financing from the First Ghana Resilient Recovery Development Policy Operation (Budget Support) which is currently pending Parliamentary approval might not be disbursed by the Bank when it is approved by Parliament.;

ii. On-going negotiations on the Second Ghana Resilient Recovery Development Policy Operation (Budget Support) amounting to US$300 million may be suspended;

iii. On-going negotiations for US$250 million to support the Ghana Financial Stability Fund may be suspended;

iv. Disbursement of undisbursed amounts totaling US$2.1 billion for on-going projects will be suspended; and

v. Preparation of pipeline projects and declaration of effectiveness for two projects totaling worth US$900million may be suspended. Full details of the World Bank portfolio are attached as Appendix 1 & 2.

vi. In total, Ghana is likely to lose US$3.8 billion in World Bank Financing over the next five to six years. For 2024 Ghana will lose US$600 million in Budget support and US$250 million for the Financial Stability Fund. 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.

Impact on the Implementation of the 2024 Budget

The potential loss of these financial resources creates a financing gap in the 2024 budget that must be addressed either through a significant reduction in expenditures or additional domestic revenue mobilisation. Failing this, the Government’s ability to achieve the targets in the 2024 Budget will be undermined and the IMF-ECF Programme will be derailed.

Impact in the IMF Programme

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.

Impact on Debt Restructuring Programme

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.

Impact on African Development Bank Programmes

The African Development Bank has indicated that the passage of the bill will not have any adverse impact on the cooperation with Ghana.

Possible adverse reaction from Germany and the wider European Community

In several discussions, with officials from the German Government, MoF officials have been informed that the German Government is against the passage of the Bill.

Given Germany’s relative strong influence in the European Union and the Official Creditor Committee, there is a need to manage the relationship to forestall a strong negative reaction.

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