First Deputy Governor of the Central Bank, Dr Maxwel Opoku-Afari, has proposed two short-term strategies to enable government reset Ghana’s economy following its disruption by the Covid-19 pandemic.
According to the Deputy Governor, disruption in Ghana’s economy on the back of the Covid-19 pandemic, resulted in a slump in economic activity with GDP growth declining to 0.4 percent compared with the pre-Covid projection of 6.8 percent.
“Additional expenditures related to the Covid-19 coupled with revenue shortfalls on account of the economic slowdown and sharp drop in oil revenues, elevated the 2020 fiscal deficit to 11.7 percent of GDP, from a pre-Covid projection of 4.7 percent. These unanticipated fiscal developments also pushed up the stock of public debt to 74.6 percent of GDP at the end of 2020 from 62.4 percent of GDP recorded in 2019,” added Dr Opoku-Afari.
The Deputy Governor made the assertion delivering a keynote address at the 5th Ghana CEO Summit on the theme Resetting Ghana’s Economy: Policy Response & Strategies for Building a Resilient Economy Post-Covid Pandemic.
Speaking further at the Summit, Dr Opoku-Afari asserted that the economic costs of the Covid shock, in terms of foregone growth and its implications for employment and poverty reduction, infrastructural development, and economic expansion, are enormous and as such would require carefully crafted strategies to reset the economic agenda back to stability and growth.
According to the Deputy Governor, the two strategies to help reset the economy and build it back to stability and growth include the sustenance of a flattened Covid curve as well as the maintenance of Covid policy responses implemented in 2020 to sustain the ongoing V-shaped recovery of the Ghanaian economy.
“First, sustain the flattened Covid-curve. By this, priority must be given to health sector policies and other supportive measures including testing, tracing and treatment, alongside mass vaccinations rollouts should continue to achieve some form of herd immunity. The flattened curve would keep the economy open for business, provide some certainty to the economic outlook, and prevent diversion of resources to any resurgence of the pandemic,” stated the Deputy Governor.
“Second, maintain the Covid-policy responses to sustain the on-going V-shaped recovery. To a large extent, the Covid policy responses (accommodative fiscal and monetary policies, macro-prudential measures, and other initiatives) proved timely and helped moderate what could possibly have been a worst outcome for the Ghanaian economy. Already, the implementation of these policies has spurred some recovery evidenced by improvement in the Bank’s high frequency economic indicators for the first quarter of 2021,” he added.
Speaking further, the Deputy Governor opined that the strategies should over time, include innovative and actionable macroeconomic policies to unwind the Covid-related fiscal excesses and lower the public debt to sustainable levels.
