Question

he novel corona virus disease (also known as COVID – 19) which started in WUHAN in December 2019 has grounded the global economy to a halt. World crude prices reached their lowest and trade among nations have generally slowed. Production has slowed and jobs are being lost across the globe.
Globally, over seven million people have contracted the virus and over four hundred thousand have died. Ghana announced its first two confirmed cases of COVID – 19 on 12 March, 2020 and as at June 14, 2020, the number of confirmed cases stood at 11,964 with 54 deaths. The impact of the COVID – 19 pandemic on Ghanaian economy and the global economy at large is predicted to be very severe. The government of Ghana, like many other governments, is spending more funds on containing the pandemic and limiting the effect of the pandemic on the economy. The IMF Executive Board approved the disbursement of US$1 billion drawn under the Rapid Credit Facility (RCF) for Ghana on April 13, 2020 after receiving application from the country’s government.
Given this background, briefly discuss the repercussions of the corona virus pandemic for the Ghanaian economy and foreign exchange market. Suggest ways of mitigating the effects of covid – 19 on Ghana’s balance of payments (BOP).

Answer 1

*Answer:

The Repercussions of the COVID-19 Pandemic on the Economy of Ghana

The Coronavirus (COVID-19) pandemic is relied upon to have a critical unfavorable impact on the worldwide economy. Governments around the globe are executing different financial measures to alleviate the antagonistic impact and give help to organizations and family units.

On 30 March 2020, Ghana's Minister for Finance conveyed a Statement to the Parliament of Ghana on the "Economic Impact of the COVID-19 pandemic on the Economy of Ghana". The Minister laid out the normal impact of the pandemic on the Ghanaian economy and the financial and monetary estimates taken by the Government of Ghana to alleviate the impact of the pandemic.

In this, we have to give features of the Government's announcement on the impact of COVID-19 and measures proposed by the Government to relieve the impact. The publication likewise features Deloitte's evaluation and general perspectives on the impact of the pandemic opposite measures taken by the Government.

Exchange Projections and Impacts

One of the most prompt impacts of the emergency will come from its impact on worldwide item costs and requests, as the presentation of Ghana's outward-confronting divisions will have a noteworthy far-reaching influence on the household movement. Ghana's economy has become progressively trade situated, which sends out in 2018 representing over 35% of GDP, a higher proportion than the normal for lower-center salary nations and any region aside from Europe. Then, the nation's fare composition is profoundly concentrated, and progressively so in essential items, with gold, oil, and cocoa together creation up over 80% of all fare income. The destiny of these three items will be of fundamental significance, however, their projections shift considerably.

Speculation

Outside direct interest in the nation is about sure to fall throughout the following eighteen months, however by what amount is indistinct. UNCTAD's most recent appraisal predicts that the COVID-19 pandemic will incite a worldwide decrease in FDI of 30-40%. This would be of comparable greatness to the worldwide budgetary emergency of 2008, which saw world FDI inflows plunge by 41.6% from 2008 to 2009, however, inflows in Ghana fell by only 12.6%. This came directly behind Ghana's first oilfield revelation in 2007, be that as it may, making it hard to learn the impact the emergency would have had otherwise. All things considered, without a comparable float this time, the 12.6% figure can with close to conviction be taken as a story for the pandemic's delay FDI inflows this year.

State Response and Fiscal/Monetary Impacts

Ghana's cedi began 2020 off with strong additions against the dollar and by early February was the world's best-performing money, however, depreciation has since deleted all increases. With the normal decrease in trade profit, further depreciation is likely, exacerbated by a fall in capital inflows as arranged speculations are required to be postponed. While this ought to be constricted to a degree by declining import volumes—with container landings in Ghana's ports had just fallen by a third as of March 30—a pronounced depreciation is conceivable. This could make sends out progressively serious, which would look good for fares of gold, whose short-run request is very value versatile, especially in India, Ghana's biggest gold market. The impacts on fares of oil are progressively unsure given its strikingly low short-run value versatility of interest. A strong depreciation would be that as it may, have considerable and unambiguous obligation implications later on, as generally 50% of Ghana's open obligation is outside cash named.

Conclusion

While the subsequent monetary hole vows to be impressive, especially notwithstanding the stuns sketched out above, Ghana has spent ongoing years assembling a reputation for responsibility and in like manner ends up all around positioned for financing support in the close to term. This, together with the nation's strong macroeconomic basics and great administration, bodes moderately well for Ghana's capacity to weather the current tempest, despite the unavoidable vulnerability that is to come.

Payment to Ghana to address the COVID-19 Pandemic:

Reviving of the economy: Starting on April 23, the incomplete lockdown has been lifted after forceful contact following, expansion of treatment and isolation focuses, upgraded testing limit, a better comprehension of the infection contagion elements, expanded ability to deliver sanitizers and meds, and extreme impact of the lockdown on the most helpless. From June 5, Stage One of the way toward facilitating restrictions will start. Strict administrations for less than 100 congregants will be permitted if social removing restrictions are met. Beginning June 15, schools and colleges will re-open to permit last year middle school, senior high, and college understudies to continue classes in front of tests, again with littler class sizes and other social separating restrictions set up. Ghana's outskirt, via air, land, and ocean, stays shut until further notice for human traffic

• The legislature submitted US$100 million to help readiness and response, and about US$210 million under its Coronavirus Alleviation Program to the promotion of chose businesses (e.g., a pharmaceutical division providing COVID-19 medications and gear), the help of SMEs and work, and the creation of certifications and first-misfortune instruments. Additional assets have been reserved to address accessibility of test units, pharmaceuticals, hardware, and bed limit.
• To make up for bigger spending identified with the COVID-19 emergency, the administration plans cutting spending in products and ventures, moves, and capital speculation (likewise mirroring the lower absorption limit of the economy because of the pandemic), for an aggregate of at any rate GHc 1.1 billion. Likewise, the administration has concurred with speculators to postpone premium installment on non-attractive local bonds held by open institutions to support the monetary part tidy up for about GHc 1.2 billion.

MONETARY AND MACRO-FINANCIAL: The Monetary Policy Committee (MPC) cut the approach rate slice by 150 premise focuses to 14.5 percent on March 18, and declared a few measures to moderate the impact of the pandemic stun, including bringing down the essential hold prerequisite from 10 to 8 percent, bringing down the capital conservation cushion from 3 to 1.5 percent, reexamining provisioning and classification rules for explicit advance classifications, and steps to encourage and bring down the expense of versatile installments. The board of trustees likewise flagged it would continue to monitor the economic impact of COVID-19 and take additional measures if fundamental.

• On April 13, 2020, the IMF Executive Board affirmed the payment of US$1 billion to be drawn under the Rapid Credit Facility.
• The COVID-19 pandemic is as of now impacting Ghana harshly. Development is easing back down, money related conditions have fixed, and the conversion scale is feeling the squeeze.
• The specialists have opportune and proactively responded to contain the spread of the COVID-19 pandemic in Ghana and bolster influenced family units and firms.
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