Question

The 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

Repercussions of the corona virus pandemic for the Ghanaian economy and foreign exchange market:

• Ghanaian Economy:

1. Ghana deals main in three products gold, oil and cocoa.
2. Due to the Covid !19 crisis, the export in these commodities have been decreased.
3. The demand for oil has been collapsed worldwide due to which Ghana has to face a lot of problems to maintain their economy.
4. Ghana's Finance Minister has reported shortfall of 5.7 billion cedis in oil receipts.
5. Gold, which is available in abundant there, and half of the economy is based on the business of gold is also going through crisis due to the pandemic. This act as buffer against oil prices.
6. But, due to closure of air routes and ship routes, there has been zero import which led to the declining of the Ghana economy.
7. Cocoa accounted for one fifth's part of Ghana's export but the prices of cocoa also fall by 20%.

• Foreign Exchange Markets

1. Covid 19 pandemic has direct impact on Foreign Exchange Markets.
2. The impact on China and Australia - Covid 19 hits the chinese and australian dollar too because China is the largest trading partner of australia, so as china got hit be the pandemic, automatically, the market of australia also gets an impact of the pandemic.
3. The European USD is also on downfall from the starting of the year.
4. But, in Us, the incvestors are still buying US dollars because in the past the US dollars has been seen as Currency of last resort.

• Ways of mitigating the effects of covid – 19 on Ghana’s balance of payments

1. They can deploy emergency relief measues.
2. They should channel liquidities to SMEs, households and workers.
3. The monetary and fiscal policies should be made strong to curb the deficiency.
4. They should export pharmaceuticals to the world as there is need of the medicines.