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President Akufo-Addo has been advised by Ghana’s Ministry of Finance not to sign the newly enacted Anti-LGBTQ+ Bill into law.
The Finance Ministry warned that taking such action could have a negative impact on the nation’s ability to get financial support from international organizations like the Bretton Woods Institutions in a press release released on Monday, March 4.
The statement highlighted concerns that the expected US$300 million financing from the First Ghana Resilient Recovery Development Policy Operation (Budget Support), currently awaiting Parliamentary approval, might not be disbursed if the bill is signed into law.
Additionally, ongoing negotiations on the Second Ghana Resilient Recovery Development Policy Operation (Budget Support), amounting to US$300 million, could be suspended.
The Ministry emphasised that these potential outcomes could result in a significant loss of financial resources, leading to a financing gap in the 2024 budget.
To address these challenges, the Ministry called upon the President to engage with religious bodies to discuss the implications of signing the bill and to establish a robust coalition and framework for supporting key development initiatives.
“The Presidency may have a structured engagement with local conservative forces such as religious bodies and faith-based organisations to communicate the economic implications of the passage of the ‘Anti-LGBTQ’ Bill and to build a stronger coalition and a framework for supporting key development initiative that is likely to be affected.”
It also added that “the President may have to defer assenting to the Bill until the court rules on the legal issues tabled by key national stakeholders (CSOs and CHRAJ).”
On February 28, 2024, Parliament approved a bill criminalizing LGBTQ activities and prohibiting their promotion, advocacy, and funding.
Under the legislation, individuals convicted of such acts could be sentenced to 6 months to 3 years in prison, while those promoting or sponsoring such activities could face 3 to 5 years behind bars.
The bill’s passage has sparked criticism from various stakeholders, including Virginia Evelyn Palmer, the Ambassador of the United States to Ghana.
Below is the full statement by the Finance Ministry
IMPLICATIONS
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 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 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.
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 the need to manage the relationship to forestall a strong negative reaction.
3. RECOMMENDATIONS
i. At the Presidency level, We recommend;
a. a structured engagement with local conservative forces such as religious bodies and faith-based organizations to communicate the economic implications of the passage of the “Anti LGBTQ” Bill and to build a stronger coalition and a framework for supporting key development initiative that are likely to be affected;
b. an effective engagement with conservative countries, including the Arab countries and China. This could help trigger resources to fill in the potential financing gaps to be created; and
c. H.E. the President may have to defer assenting to the Bill until the court rules on the legal issues tabled by key national stakeholders (CSOs and CHRAJ).
ii. At the MOF Level,
a. The Ministry will continue to engage with the IMF on the alternative credible sources of funding that will plug the financing gap;
b. GRA to embark on a vigorous revenue mobilisation drive focusing on implementation of approved measures as well as compliance;
c. Consider possible expenditure rationalisation to accommodate the shock from the potential withdrawal of resources; and
d. Leverage on the Ghana Beyond Aid Principles and change the structure of our resource mobilisation. We must improve our domestic resource mobilisation efforts by working towards our medium-term tax revenue to GDP target of 17%-18% and eventually wean ourselves off the unsustainable dependency on development assistance.
4. CONCLUSIONS
The passage of the new Bill calls for fortifying local financial systems, strengthening African financial institutions as well as our development journey in partnership with other countries. In line with the Ghana Beyond Aid Agenda, Ghana can navigate the complexities of international relations and emerge with a robust, resilient economy with Ghanaian ownership of the commanding heights of the economy.
Meanwhile; the World Bank has warned Ghana of funding cuts over Anti-LGBTQI+ Bill
The World Bank is threatening to cancel loans earmarked in Ghana over the passing of the controversial Anti-LGBTQI+ Bill, known formally as the Human Sexual Rights and Ghanaian Family Values Bill 2024.
The Bretton Woods institution, whose funding this year is seen as critical to sustaining Ghana’s programme with its sister body the International Monetary Fund, has raised “concerns over the potential impact of the Promotion of Proper Human Sexual Rights and Ghanaian Family Values Bill on the implementation of World Bank projects and activities in Ghana”.
Parliament is expected to consider at least three major facilities from the World Bank worth at least $850 million.
A withdrawal of these loans could jeopardise the entire IMF programme and the related debt restructuring programmes.
There is grave concern about what the implications of this could be for Ghana’s economic recovery effort, with signs of business confidence returning and fresh recruitment staging a comeback.
Already the cedi is feeling the shakes, experiencing depreciation against all major currencies on Friday.
World Bank letter
Correspondence seen by Asaase News shows that the World Bank began to issue warnings during the debate stages of the bill.
In August 2023 the World Bank referred Ghana to a similar decision it took that month to cancel new loans to Uganda over the East African country’s harsh new anti-gay law.
Interestingly, analysts have described Ghana’s “Human Sexual Rights and Family Values Bill” as even harsher.
The much-criticised bill which was passed last week in Ghana was by way of a private member’s bill, sponsored by eight members of Parliament in January 2021, and passed only last week.
In one of the letters, signed by Pierre Laporte, the World Bank country director for Ghana, Liberia and Sierra Leone, and addressed to the Government of Ghana, the Bank warned that it was likely to adopt the same hardline position it took with Uganda last year when its parliament passed the Anti-Homosexuality Act.
“World Bank Group reiterates its deep commitment to supporting Ghana in achieving its development goals while ensuring that in the implementation of World Bank projects no beneficiaries are impeded from sharing in any development benefits on the grounds of their age, gender, ethnicity, religion, physical, mental or other disability, social, civic or health status, sexual orientation, gender identity, indigenous heritage, or economic status,” Laporte wrote.
The Ugandan position
In August 2023, the World Bank declared that it would halt new lending to the Ugandan government after concluding that its anti-LGBTQ law, which had been condemned by many countries and the United Nations, contradicts the Bank’s values.
“No new public financing to Uganda will be presented to our Board of Executive Directors until the efficacy of the additional measures has been tested,” said the World Bank in an 8 August 2023 letter to Ugandan government officials which Reuters captured.
“Uganda’s Anti-Homosexuality Act fundamentally contradicts the World Bank Group’s values. We believe our vision to eradicate poverty on a liveable planet can only succeed if it includes everyone, irrespective of race, gender or sexuality,” the World Bank stressed.
Unlike Ghana, Uganda is not under an IMF programme.
Currently, before Ghanas Parliament is a $300 million World Bank loan.
The fate of that facility is still hanging as the country awaits the last step in the legislative process of Ghana’s Anti-LGBTQI+ Bill – presidential assent.
Sources at Jubilee House said that Parliament was yet to present the bill there.
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