By Frank Amponsah
An internal Memo of the Ministry of Finance intercepted by this paper has indicated that the passage of the Proper Human Sexual Rights and Ghanaian Family Values (“Anti-LGBTQ”) Bill calls for fortifying local financial systems, strengthening African financial institutions as well as Ghana’s development journey in partnership with other countries.
According to the internal Memo the new bill would have some impact on World Bank Funded Programs, the 2024 Budget, IMF programs, Debt Restructuring Programs among others.
On the 28th of February, 2024, the Parliament of Ghana passed the Proper Human Sexual Rights and Ghanaian Family Values (“Anti-LGBTQ”) Bill.
Though the Bill is yet to be forwarded to H. E. the President for assent, it has triggered reactions from some of Ghana’s Development Partners, International Financial Institutions and CSOs in the country.
In view of the mixed reactions, the Minister for Finance convened an Emergency Meeting with Chief Director and Director of the Ministry, the Governor and 1st Deputy Governor at BoG and the Commissioner-General of GRA to ascertain the immediate impact of the passage of the Bill on the implementation of the 2024 Budget.
The meeting came up with some indicators regarding the impact of the passage of the Bill.
They averred that 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 World Bank when it is approved by Parliament.
Also, the on-going negotiations on the Second Ghana Resilient Recovery Development Policy Operation (Budget Support) amounting to US$300 million may be suspended and the on-going negotiations for US$250 million to support the Ghana Financial Stability Fund may be suspended.
According to the Ministry, disbursement of undisbursed amounts totaling US$2.1 billion for on-going projects will be suspended and 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.
“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 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.”
On the implementation of the 2024 Budget, the Report from the meeting stated that 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 the expenditures or additional domestic revenue mobilisation. Failing this, Government’s ability to achieve the targets in the 2024 Budget will be undermined and the IMF-ECF Programme will 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.”
The passage of the Bill could also impact negotiations with the Official Creditor Committee (OCC) and Eurobond holders under Ghana’s debt restructuring programme as it 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 African Development Bank has indicated that the passage of the bill will not have any adverse impact on the cooperation with Ghana.”
It also emerged that several discussions with officials from the German Government have indicated that the German Government is against the passage of the Bill, and given Germany’s relative strong influence in the European Union and the Official Creditor Committee, there is the need to manage the relationship to forestall a strong negative reaction.
