Ghana’s economy couldn’t withstand partial lockdown beyond three weeks – Ofori-Atta

Finance Minister Ken Ofori-Atta has admitted that it was impossible for the government to have continued the partial lockdown imposed on Accra, Tema, Kasoa and Kumasi beyond the three weeks announced by President Akufo -Addo.

According to him, the Ghanaian economy, which is largely informal, could not sustain that decision beyond the three-weeks.

President Akufo-Addo on March 27th announced a partial lockdown as part of measures to curb the spread of the coronavirus pandemic in Ghana but lifted it after 3-weeks.

Speaking at an event at the Jubilee House, the Finance Minister said it was necessary to lift the lockdown.

“When you look at what happened during the lockdown. It was quite clear after a point that given the 90% of our population is informal and they go out each day to earn wages, it became increasingly impossible to continue with such a policy,” he said.

The Coronavirus (COVID-19) pandemic has had a significant adverse impact on the global economy.

In Ghana, though the government is implementing various fiscal and monetary measures to mitigate the adverse effect and provide relief for businesses and households, the outbreak has brought three years of economic growth of 6% or more to a sudden halt, with the Ministry of Finance anticipating that growth could slow to 1.5%, the least in 37 years.

Already, President Akufo-Addo has stated that the effect of the COVID-19 pandemic could affect Ghana’s growth rate from 7 percent on average to 2.5 percent if the situation persists until the end of 2020.

The Finance Minister, also stated that Ghana will record a significant drop in revenue target for 2020 due to the COVID-19 pandemic because the country is recording a huge decline in revenue from the port, petroleum revenue receipts as well as tax revenue.

He, however, indicated that the cumulative effect of the novel coronavirus pandemic will cost Ghana GHS9.505 billion.

Mitigating Measures

Meanwhile, Government has implemented some measures to mitigate the impact of COVID-19 on the economy.

These include the establishment of a Coronavirus Alleviation Programme (CAP) to facilitate economic recovery.

Lowering of the cap on Ghana Stabilization Fund (GSF) from the current US$300 million to US$100 million to allow for the transfer of excess funds to the CAP

Reduction in the policy rate by 150 basis points to 14% and drop in regulatory reserve requirement from 10% to 8% to increase the supply of credit to the private sector.

Commercial banks are also providing a syndicated facility of GHS3 billion to support key industries; to grant a six-month moratorium on principal repayments for selected businesses, and to reduce interest rates by 200 basis points, also to increase credit supply to the private sector

It has also has put in place a GHS600 million soft loan scheme with a two-year repayment plan for micro, small and medium scale businesses and taking care of water bills for all Ghanaians for April, May and June 2020.

There’s also a relief for electricity consumers, where all lifeline consumers will get a one hundred percent waiver for three months; while other consumers will get a fifty percent reduction.

Currently, Ghana’s COVID-19 cases have increased to 5,127 with 494 recoveries and 22 deaths.

Source: Citi