Ghana’s partial lockdown could not have gone beyond three weeks – Ken Ofori-Atta Featured

By Business Desk May 14, 2020 654 0

The Minister of Finance, Ken Ofori-Atta, has said that it was impossible for the government to have gone beyond the three weeks of partial lockdown imposed on Accra, Tema, Kasoa and Kumasi.

This is because the Ghanaian economy, which is largely informal, could not sustain that decision beyond the period.

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 per cent 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.

Effect

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 six per cent or more to a sudden halt, with the Ministry of Finance anticipating that growth could slow to 1.5 per cent, the least in 37 years.

Already, President Nana Akufo-Addo has said the pandemic could affect the country’s growth rate, and reduce it from seven per cent, on average, to 2.5 per cent, if the situation persists until the end of 2020.

Mr Ofori-Atta 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 indicated that the cumulative effect of the novel coronavirus pandemic will cost Ghana GHC9.505 billion.

Measures undertaken

So far, the government has implemented some measures to mitigate the impact of COVID-19 on the economy, which includes the establishment of a Coronavirus Alleviation Programme (CAP) to facilitate economic recovery; lowering of the cap on Ghana Stabilization Fund (GSF) from the current $300 million to $100 million to allow for the transfer of excess funds to the CAP; reduction in the policy rate by 150 basis points to 14 per cent and a drop in regulatory reserve requirement from 10 per cent to eight per cent to increase the supply of credit to the private sector.

Commercial banks are also to provide a syndicated facility of GHC3billion 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 put in place a GHC600 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 100 per cent waiver for three months, while other consumers will get a 50 per cent reduction in tariffs.

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