Question

Coronavirus epidemic outbreak has had an untold hardship on the economy of Ghana. One of such influences was a rise in inflation rate from 7.8 percent in March, 2020 to 10.6 percent in April of the same year. Assuming this phenomenon persists; discuss the possible monetary and fiscal measures government may use to address the situation. You may use diagrams where necessary.

Answer 1

Inflation in Corona pandemic is different from usual inflation phenomenon. In this other economic activities also stucked up leading to economic down trend. In such case following points will help to mitigate the inflation:

1. In Monetary policy measures bringing down the major policy rates like Bank rate, Repo rate, to increase the liquidity.
2. Provide special lower interest rate loans to fulfill small monetary hurdles for businesses.
3. Fiscal measures may include special stimulus to all those business which are in the business of providing security against pandemic and for those measures to increase general public security aspects.
4. Special measures to put a check on spread of pandemic.
5. Some sort of pandemic based exemption in compliance of regulatory norms for businesses like Taxation etc.
6. Those articles which contributes to Inflation basket should be treated specially as to bring their prices down by policy measures like remove taxation, instead give promotion package. On items like Petroleum, Food etc.
7. Measures to increase the supply to bring down the price of those items which have bearing on consumer's pocket.