SIGA pegs government’s fiscal exposure to projects at GHS 21.5bn
Government, according to the State Interests and Governance Authority (SIGA), stands to lose some GHS 21.5bn in investments made in 2020.
According to SIGA, government’s financial or fiscal exposure to investments made within 2020 include government subvention of GH¢1,476.83 Million, on-lent loans of GH¢14,738.40 Million; government guarantees of GH¢2,383 Million, contingent liabilities of GH¢138.99 Million (US$24.13 Million) from ongoing Public-Private Partnership (PPP) projects. Government also provided support and bail-outs to some Specified Entities.
”Government’s fiscal exposure (either explicitly or implicitly), as at the end of FY2020 amounted to GH¢21,531.10 Million,” stated SIGA in the 2020 State Ownership Report by the Ministry of Finance.
Financial or fiscal exposure refers to the amount of money an investor stands to lose in investments made in a project or a business.
Touching on the performance of SOEs, JVCs and other Specified Entities in relation to the adverse impact of the Covid pandemic, SIGA in the report asserts its projection for 2020 envisaged a turnaround of the performance of Specified Entities, which would have resulted in increases in payment of dividends to Government.
However, these projections could not be realized as a result of the impact of COVID-19.
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“Government had to rescue some Entities at an estimated total sum of GH¢1,168.00 million, US$241.80 Million and EUR15.00 million. Additionally, Government in 2020 supported eight (8) subvented agencies that provide public services, the sum of GH¢1,426.74 Million, representing an increase of 414.62 percent over GH¢277.24 Million in FY2019, to enable them meet ongoing obligations, including staff costs, capital expenditure and goods and services,” it said.
According to SIGA, the total dividend receipts from Specified Entities as at end of 2020 amounted to GH¢275.48 Million compared to the projected amount of GH¢290.94 Million, representing a shortfall of GH¢15.46 Million (5.31 percent).
The 2020 dividends outturn represented an increase of 164.96 percent (GH¢171.51 Million) compared to the 2019 outturn (GH¢103.97 Million). The improved dividend receipts for 2020 were mainly on account of a marked increase in the contribution of the Minority Interests, particularly in the Mining Sector which increased its contribution from GH¢10.84 Million in 2019 to GH¢224.84 Million in 2020.
Checking underperformance of Specified Entities
SIGA, says as part of the way forward, it will continue to analyse extensively the root causes of the underperformance of some of these Entities, examine best international practices, benchmark performance against their local, regional, and international peers, and make appropriate recommendations in line with the Authority’s mandate.
The Authority says it will seek to undertake strategic interventions to address the worsening Net Losses, reduce the fiscal risk exposure to government, improve on the profitability position of the Entities and above all increase dividend payment to Government.
