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Implementing an anti-LGBT+ law passed by Ghana’s parliament could derail the west African country’s funding from multilateral institutions, including the World Bank and IMF, the finance ministry has warned.
Ghana, which is seeking to recover from its worst economic crisis in a generation, could lose $3.8bn in World Bank financing over the next five to six years if President Nana Akufo-Addo signs the bill into law, according to a finance ministry memo seen by the Financial Times.
This potentially included an immediate loss of $600mn in budgetary support for 2024, and $250mn in a separate World Bank commitment, the ministry said.
“This will negatively [affect] Ghana’s foreign exchange reserves and exchange rate stability, as these inflows are expected to shore the country’s reserve position,” the memo said.
The withdrawal of World Bank support would also negatively affect the country’s IMF programme, which is contingent on reliable financing from development partners. Ghana, which defaulted on its debt in 2022 and is struggling with inflation of 23.5 per cent, agreed a $3bn IMF-supported scheme in December 2022.
“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,” the finance ministry memo said.
The concern comes after the World Bank said last year it would not consider any new funding for Uganda after the east African state passed its own anti-gay law.
Ghana’s parliament last week passed a sweeping anti-LGBT+ law called the Promotion of Proper Human Sexual Rights and Ghanaian Family Values bill. The legislation received bipartisan support and has been welcomed by Christian, Muslim and traditional groups.
It expands the criminalisation of consensual same sex relationships and imposes jail time for sexual minorities and people and organisations deemed to advocate on their behalf. The law recommends three years in prison for anyone convicted of being gay, five years for “promoters” of gay rights and five years for those engaging in gay sex, up from three previously.
The IMF said last week it was “watching” events in Ghana closely but added: “We cannot comment on a bill that has not yet been signed into law and whose economic and financial implications we have yet to assess.”
The World Bank did not immediately respond to a request for comment.
Akufo-Addo, who has seven days from the passing of the law on February 28 to give presidential assent or 14 days to give reasons if he declines, indicated late on Monday that he would delay any action pending the outcome of a legal challenge by civil society groups at the Supreme Court.
Bright Simons, vice-president of Ghanaian think-tank Imani, questioned whether the finance ministry had briefed parliament on the potential repercussions of the bill. “The finance ministry’s last-minute intervention . . . reinforces the view that the bill is symptomatic of deeper problems in Ghana’s political system, a disorganisation at the top,” he said.
Any disruption to the IMF programme risks jeopardising the country’s continuing debt restructuring negotiations with bilateral and commercial eurobond holders.
Although a package of support from the African Development Bank would be unaffected, according to the finance ministry memo, Ghanaian officials were concerned about a “possible adverse reaction from Germany and the wider European community”. German officials have informed Ghana that they oppose the bill.
The finance ministry urged Ghana’s president to begin an “effective engagement with conservative countries, including the Arab countries and China” that could “help trigger resources to fill in the potential financing gaps”.
Like many African states, Ghana’s government is trying to balance deeply held conservative values at home and its engagement with western countries and institutions.
“Human rights imperialism”, which conservative countries see as western entities imposing their social mores on the continent, is widely condemned across Africa.
“Conservative countries in the Global South find themselves under serious pressure to conform, because the effects of misalignment are more pervasive in terms of lost investment, curtailed tourism and a loss of [global reputation],” said Simons.
Turning to wealthy Gulf states may not be straightforward as countries such as the United Arab Emirates and Saudi Arabia are loosening their own laws on gender norms, he added.
Source: Economy - ft.com
