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COVID-19: Ghanaian government paying water, electricity bills for its people

The Ghanaian government is absorbing the electricity bills of its poor people and covering half of the energy bill of wealthier citizens as part of palliatives to cushion the impact of lockdown to contain the spread of the coronavirus pandemic.

It is also paying the water bills of all Ghanaians for April, May and June, as part of efforts to lessen the hardships in the country.

This casts uncomfortable glare at its bigger neighbour Nigeria, whose government announced an intention to offer free electricity to its people for two months but has since been unable to do so as it moves to fully reopen the economy.

Ghana’s President Nana Akufo-Addo said in April that the government will fully cover the bills of low-income consumers of electricity in the country for April, May and June 2020.

“We have decided further measure of mitigation for Ghanaians for the next three months… Government will fully absorb electricity bills for the poorest of the poor, i.e: lifeline consumers.

“This will cover persons who consume 0 to 50-kilowatt hours per month for this period. This forms part of relief interventions by the state amid the novel coronavirus pandemic. Other categories of consumers will enjoy a 50 percent discount within the same period. For all other consumers, residential and commercial, the government will absorb 50 percent of your electricity bill for this period using your March 2020 bill as the benchmark,” the president said in the speech.

Many Ghanaian went on social media to praise their government’s efforts and the impact it has had on their lives during the three-week lockdown imposed in major cities Accra and Kumasi.

Ghana has recorded over 6400 confirmed cases and while nearly 2,000 people have recovered and 31 people have since died.

The country has earned praises for testing over 115,000 people using a pool testing of samples to maximise the use of coronavirus test kits that are in short supply globally.

It involves using a single test on 10 samples combined. If there is a positive result then the entire batch is tested individually to identify the infected sample.

Some scientists believe that the method saves time yet some say it is only efficient if cases remained low. Germany and India have adopted similar methods in testing for the virus – allowing them to expand their screening capacity and improve detection in communities.

Ghana’s medical drones have being deployed to deliver Covid-19 samples directly to laboratories – the first country to do so in the world.

Funding palliatives

According to local media reports, the government has provided funding for palliatives mainly through the Stabilisation Fund, which was established under the Petroleum Revenue Management Act (Act 815) to provide budgetary support in times of shortfalls in expected petroleum revenues.

The Petroleum Revenue Management Act (Act 815) stipulates how the oil revenue should be distributed. Based on the Act, transfers were made to the Ghana National Petroleum Corporation (GNPC), to the Annual Budget Funding Amount (ABFA) and the Ghana Petroleum Funds. The Ghana Petroleum Funds, comprises the Stabilisation Fund and the Heritage Fund

In April, the fund had a balance of about $300million and the government withdrew $200million into a contingency fund set up to fund the fight against the coronavirus.

Other fiscal measures under consideration includes arranging with the Bank of Ghana (BoG) to defer payments on non-marketable instruments estimated at GHC1.222 billion to 2022 and beyond.

It also plans adjusting expenditures on goods and services as well as Capex downwards by GHC1.248 billion, secure both World Bank and IMF credit facility of GHC1.716 billion and GHC3.145 billion respectively, and also reduce the proportion of Net Carried and Participating Interest due GNPC from 30 percent to 15 percent.

Ofori-Atta, the country’s finance minister told lawmakers that the government plans to amend the PRMA to allow a withdrawal from the Ghana Heritage Fund (GHF) to undertake urgent expenditures in relation to the Coronavirus pandemic. The Ghana Heritage Fund is estimated to be US$591.1 million.

The minister said these measures would result in a fiscal deficit of 6.6 percent of revised GDP with a corresponding primary balance deficit of 1.1 percent of revised GDP.

African governments facing economic challenges are incapable of financing palliatives as Western Governments could.

Nigeria, bogged down by debt and fall in oil incomes is embarking on controversial palliative measures including distributing cash and sharing food to children at home, measures that have come under severe criticism because of lack of transparency and accountability.

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