Question

QUESTION 2
The government of Ghana through the Minister of Finance presented the 2020 Budget statement to Parliament in November 2019.The Coronavirus Disease 2019 (COVID -19) pandemic that has hit the world has impacted on global economy including Ghana, thus affecting our macroeconomic targets in the budget statement presented in November 2019. The Minister of Finance presented a statement to Parliament on the economic impact of COVID – 19 pandemic on the economy of Ghana and the way forward at the end of March, 2020.
Discuss five (5) key impact of the COVID-19 on the achievement of our fiscal policy targets for the year 2020 by comparing the original budget statement to the one presented after COVID- 19.   

Answer 1

ANSWER: Fiscal policy: It is the expenditure and revenue policy of the govt. to accomplish the desired objectives. The objective of the fiscal policy is to reduce aggregate demand. But this COVID-19 situation has adversely impacted globally. So govt. has turned the budget from development projects to health welfare budget. the pandemic situation has impacted ghana severely. growth is slowing down, financial conditions have tightened, and the exchange rate is under pressure.

Five key impacts of the COVID-19 on the achievement of fiscal policy targets for the year 2020 by comparing the original budget statement to the one presented after COVID-19:

1. Due to pandemic govt. needs more funds for disbursement to citizens and support affected households and firms.
2. The budget deficit is projected to widen given expected lower govt. revenues and higher spending need related to the pandemic.
3. The emergency fund has been created in many countries in ghana also they created a rapid fund facility that addresses the urgent financing needs.
4. Govt. ministry is more focused on spending on health and social support to affected households and firms.
5. They shifted their defense budget to health and related sectors.

otherwise, their original budget was mostly focused on reforming public service delivery, domestic revenue mobilization, transforming agriculture and industry, etc. their overall GDP was 6.8% now covid-19 has impacted the gdp also.