Global Economics

The GRAPHIC BUSINESS asks: How best do we manage the effects of the CONVID-19 on the economy?

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Economic activities have slowed down ever since Ghana began to record cases of COVID-19. Many have resorted to panic buying amid fears of a lockdown, which has resulted in the prices of goods, particularly food items and hand sanitisers, going up.

The government, in an effort to curtail the spread of the pandemic, has closed the country’s land, sea and air borders.

The Bank of Ghana (BoG) has said it will continue to assess the possible impact of the pandemic on the domestic economy while taking the necessary steps to mitigate its impact to ensure financial and economic stability.

Prof. John Gatsi, Economist
The effects on Ghana are many. The immediate positive effects on the cedi will be eroded by lower exports and fiscal losses because of extra precautionary measures in many economies.

Budget implementation is about to suffer as the average crude oil price of US$58 per barrel, projected in the 2020 budget, has since dropped to around US$44. Meaning the first quarter is likely to suffer about 24 per cent reduction and if volume of production remains the same then revenue loss may be around same level. 

This has implications for the amount of money to be available for transfer to the Annual Budget Funding Amount (ABFA) and possible depletion of the Stabilisation Fund.

Projects anchored on the ABFA are expected to suffer if the global coronavirus spread is not contained and mitigated. One of the potent measures to mitigate sporadic spread of the coronavirus has been a lockdown, but in the Ghanaian and African context, it will be a disaster if such lockdown plans do not include livelihood support strategies.

These strategies call for financial support which African governments do not immediately have, hence the motivation to approach the International Monetary Fund (IMF).

It is now normal for the government of Ghana to apply to benefit from the Rapid Credit Facility (RCF) which is an existing credit facility in the portfolio of facilities by the IMF.

Though the RCF is generally to deal with poverty reduction when developing countries face balance of payment difficulties, Ghana qualifies under emergency factors due to the coronavirus which portends to compromise growth prospects and seriously undermine the balance of payment position.

While waiting for the IMF concessionary loan, a lockdown should be executed using some mediating factors, including interim rent waivers/subsidies or extension for low income families; interest payment postponement and debt restructuring for low-income households and micro and small businesses and strategic financial and fiscal stimulus arrangements for businesses.

Government should look at the coronavirus crisis management comprehensively to establish objectively the effects on budget implementation, vulnerability of businesses, temporarily job losses, especially for the informal sector, self-employed, effects on the financial sector and general support services.

Mr Anthony Selorm Morrison, Agribusiness Management expert
The country could be hit with serious food shortages due to the coronavirus pandemic and so it is time for the country to go into a serious strategic thinking for the agric sector, especially, which is susceptible to natural and artificial disasters.

Currently, food supply has been badly affected. It is unfortunate that Ghana has been caught unawares by the global pandemic, particularly, at a time when farmers should have been preparing for production season.

Areas that will be badly affected include vegetables, soya, rice and maize among others. We are not sure if we have done enough as a country with the National Food Buffer Stock Company (NAFCO), for instance, to purchase, preserve, sell and distribute foodstuffs, while ensuring the security of farmers and insulating them against losses resulting from such disasters.

There is going to be a struggle between feeding humans and animals as productivity within the sector cannot be certain.

Those who have invested in poultry and other livestock will have a hard time feeding them well due to shortage in foodstuffs and increase in prices, and which will result in losses to them.

Markets are stressed with unavailability of foodstuffs and price increase in the few, hotels have also been caught in same vein and will struggle to pay agric suppliers they deal with.

As a matter of urgency, government should set up a ‘Ghana Agriculture Emergency and Disaster Fund’ to support farmers and processors so they can continue to provide more food for the country to ensure food security.

Dr Richmond Atuahene, Banking Consultant
We should look at our critical industries and begin to support them to be able to go through this crisis or else there will be no economy after everything.

The crisis can grind us to a halt. The problem I have with the nation is that when we are discussing national issues, some people turn it into politics. The United States of America has decided not to support only industries but human beings as well, and so each American will get US$1,200 support at least for the first one month.

It’s not a political issue and I find it unbelievable. If they don’t come with one voice to speak as a nation, we will be stagnating this country and politics will take over from everything. Let us come together, let us think of how we can get over it because the disease has no barrier.

I would have thought there would be a parliamentary select committee which together with academia will discuss what best methods we can use.  

If we are talking of a stimulus package and if we want to be more nationalistic, we should be more transparent and let people know which industry we want to support, which sector, and what will be the impact on the economy?

Some are questioning the usage of the Heritage Fund but money cannot be saved while we are dying. Other countries are borrowing and if you have some funds to support everybody, why would we not talk about it?

Let us be very objective and transparent about everything we are doing. Pharmaceutical companies have been supported earlier under the EXIM, so, that’s why the President said they should be up for the game.

I think that as a nation we should identify the sectors, e.g. if it’s food manufacturing, then we support. The Minister of Agriculture says there is a buffer for rice. Quickly the rice should be turned into a quality one so that in two/three months’ time the rice will come from the buffer stock at the same price and people will consume local rice because there will be no imported rice.

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