Anti-Gay Bill… Ghana To Lose $3.8bn World Bank Funds

Ghana is likely to lose US$3.8 billion in World Bank financing over the next five to six years if the Human Sexual Rights and Family Values Bill popularly known as Anti-Gay Bill becomes law, the Ministry of Finance has warned.

It has therefore appealed to President Akufo-Addo not to assent to the bill passed by Parliament on February 28, 2024.

In a paper assessing the economic impact of the bill, the Finance Ministry said for 2024, Ghana will lose US$600 million budget support and US$250 million for the Financial Stability Fund.

“This 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,” the paper noted.

“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,” it added.

According to the ministry, ongoing negotiations on the second Ghana Resilient Recovery Development Policy Operation (DPO) for budget support amounting to US$300 million may be suspended.

The paper pointed out that ongoing negotiations for US$250 million to support the Ghana Financial Stability Fund may also be suspended.

It said the disbursement of undisbursed amounts totaling US$2.1 billion for ongoing projects will be suspended, whereas the preparation of pipeline projects and declaration of effectiveness for two projects totaling US$900million may be suspended.

The ministry indicated that the potential loss of these financial resources will create a financing gap in the 2024 budget that the government must address through additional domestic revenue mobilisation and a significant reduction in expenditure.

“Failing this, the Government’s ability to achieve the targets in the 2024 Budget will be undermined and the IMF-ECF Programme is likely to be derailed,” the paper stated.

It continued, “While no direct conditionality in the IMF-ECF Programme relating to the passage of the Bill has been identified, 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 (DPO).”

The ministry said, hence the non-disbursement of the Budget Support from the World Bank will derail the IMF programme, which puts Ghana at risk of ultimately losing out on US$720 million which would have been disbursed after the second and third review.

“This will in turn trigger a market reaction which will affect the stability of the exchange rate,” it asserted.

The ministry again pointed out that 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,” it said.