Graphic Business News

Economists proffer measures to deal with impact of COVID-19

By: Ama Amankwah Baafi
Mr Anthony Selorm Morrison
Prof John Gatsi

The government will require pragmatic steps to reduce the impact of the coronavirus on the economy, the Head of Department of Finance at the University of Cape Coast, Prof. John Gatsi, has said.

Explaining the impact, Prof. Gatsi said the immediate gains made to stabilise the cedi would 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,” he said in an interview on how best to manage the impact of COVID-19 on the economy.

He said one of the potent measures to mitigate the sporadic spread of the coronavirus had been a lockdown, but in the Ghanaian and African context, such lockdown plans should include livelihood support strategies, or else there would be a disaster.

Prof. Gatsi explained that those strategies called for financial support which African governments did 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,” he stated.

"President Akufo-Addo announced that some social gatherings would remain suspended even as the partial lockdown of the country had been lifted.
These include conferences, workshops, funerals, parties, nightclubs, drinking spots, beaches, festivals, political rallies, religious activities and sporting events. All educational facilities, private and public, are to remain closed."

He added that the government should look at the coronavirus crisis management comprehensively to establish objectively the effects on budget implementation, vulnerability of businesses, temporary job losses, especially for the informal sector, self-employment, effects on the financial sector and general support services.

President Nana Addo Dankwa Akufo-Addo on Monday, April 20, 2020 lifted the partial lockdown he announced on March 28, 2020 to help halt the spread of COVID-19.

As part of that restriction, businesses were closed and movements restricted, with the exception of essential service providers in Accra, Tema, Kasoa and Kumasi.

The two-week restriction which took effect from March 31 was extended for another week until it was lifted.

Globally, economic activities are not in full force because of the impact of COVID-19. In Ghana, the government has absorbed water bill for the next three months, free bus rides for health workers and provision of supplies for deprived communities as social interventions to minimise the impact of the pandemic.

Impact on agric
The President of the Chamber of Agribusiness Ghana (CAG), Mr Anthony Selorm Morrison, said the country could be hit with serious food shortage due to the coronavirus pandemic, hence it was time for serious strategic thinking for the agric sector.

He noted that currently, food supply had been badly affected and that it was unfortunate that Ghana had 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, 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,” he said.

Mr Morrison said there would be a struggle between feeding humans and animals as productivity within the sector could not be certain.

Consequently, 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.

“As a matter of urgency, the 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,” he recommended.