About 19 out of the 28 state-owned enterprises (SOEs) are projecting losses of up to GHC1.55 billion for this year, the Finance Minister, Ken Ofori-Atta, has said.
Presenting the Mid-year Budget Review in Parliament on Thursday (23 July), Ofori-Atta said that “COVID-19 has also led to disruption in corporate and general business confidence, with threats to projected revenues, profitability, liquidity and corporate growth”.
He told MPs, “So far 19 out of the 28 state-owned enterprises (SOEs) are projecting losses up to GHC1.55 billion for 2020. Collectively, 1,531 job losses were recorded between April to June 2020 from eight companies within the ceramics, timber, food and agro-processing industries in the manufacturing sub-sector.”
Ofori-Atta said the combined effect of these developments is that Ghana’s overall economic growth and revenue are expected to fall sharply while expenditures rise.
He said the economic shock of the pandemic has manifested through external trade disruptions (particularly with China), a decline in commodity prices (particularly oil, whose prices have fallen by more than half) and tightening of global financial markets.
Earlier, the government, giving a glimpse of what the Mid-year Budget Review would look like, directed all state-owned enterprises (SOEs) to cut their budgets and redirect the funds made available into supporting government efforts to fight the COVID-19 pandemic.
Stephen Asamoah Boateng, director general of the State Interests and Governance Authority (SIGA), said the move is among strict measures taken by the government to ensure that all SOEs are responsible and conduct their operations in a manner that would be of the greatest support to Ghana’s COVID-19 fight.
“The broader picture is that every state entity has to revise its budget; that is a directive given by the president,” Asamoah Boateng told Asaase Radio’s Nana Oye Ankrah. “There is no percentage-slash-across-board directive.
“It should be dealt with on a case-by-case basis by all the state entities because some are not doing that bad. But generally, across the board, there is an expectation of about 25-30% drop in budgets.”
Citing Ghana National Petroleum Corporation (GNPC) as an example, Asamoah Boateng said: “All of them revised their budget. Due to the drop in oil prices, GNPC has had to reverse its budget downwards; the drop has affected the whole projection of their revenue.
“Their [corporate social responsibility], which had a budget of GHC55 million, was dropped to about GHC35 million,” he said.