Question

In: Economics

The World would not be same again. In the last 15 Pandemic events from the 14th...

The World would not be same again. In the last 15 Pandemic events from the 14th century, the world has never remain the same and Covid-19 would not be an exception. The long term economic hangover is just beginning to birth. Though monetary and fiscal measures have been ramped up to ease the short term effect historical trend suggest the long term adverse economic distributional effects could persist for a generation or more. Covid-19 has created huge financing gaps reflecting dwarf domestic mobilisation and elevated health related and economic stimulus intervention.

The International Monetary Fund (IMF) (2020) states “more than ever, Sub-Saharan African countries also need large-scale external financing. The International Monetary Fund and the World Bank estimate that the region faces a government financing gap (assuming a modestly supportive fiscal stance) of at least $114 billion in 2020. African governments cannot mobilize this amount domestically”. The World Bank and the African Development Bank (AfDB) despite the uncertainty surrounding the AfDB presidency have been stepping up financing. Recently, G20 announced an important initiative to suspend debt-service payments until the end of 2020 for poor countries that request relief though some countries have expressed reservations and their unwillingness to sign up for this initiative.

Here in Ghana, the macro-fiscal impact of Covid-19 is well documented reflecting in the projected GDP decelerating from 6.8% in the 2020 budget to worst scenario of 1.5% given the partial lockdown and the fiscal deficit escalating to GHS 30.2 billion from GHS 18.9 billion. Bank of Ghana has in response to the impact of Covid-19 given the elevated fiscal deficit adopted Asset Purchase arrangement under a Quantitative Easing (QE). The Central Bank indicated it stands ready to support government with GHS 10 billion in the wake of the coronavirus pandemic. Out of this, the Bank has already purchased a Government of Ghana COVID-19 relief bond with a face value of GH¢5.5 billion at the Monetary Policy Rate with a 10-year tenor and a moratorium of two (2) years (principal and interest). Ghana like many other countries is in the second stage of the Covid-19 where we have decided to live with the virus unlike the first stage where the focus was on containment and the last stage when vaccine is developed hopefully.

Kindly Attempt the following questions

  1. Critically examine why some countries are unwilling to take advantage of the G20 Sponsored Debt Relief Arrangement.
  2. Given the fiscal and monetary policy response to covid-19 and the global outlook presented recently by [1] IMF, Critically discuss the outlook price development with particular reference to exchange rate for the rest of the year and the first quarter of 2021.
  3. Discuss the implications of the widespread disruptions to global, regional supply for Ghana’s Balance of Payments.

Solutions

Expert Solution

A) The economic situation of different countries will not be the same as before. after the widesread of disese COVID 19 many countries like india, china, US faces financila crisis. So they cannot move ahead without any support from monetary authorities .In such a situation G20 announced an important initiative to suspend debt-service payments until the end of 2020 for poor countries that request relief though some countries have expressed reservations and their unwillingness to sign up for this initiative. The G20 should provide significant financial assistance through grants and concessional loans to the poor and developing countries that desperately need funds to augment their public health infrastructure and to revive the economy. G20 Formed in 1999, It has a mandate to promote global economic growth, international trade, and regulation of financial markets. G-20 is a forum, not a legislative body thus its agreements and decisions have no legal impact, but they do influence countries' policies and global cooperation.The main purpose G20 are firstly to take care of Policy coordination between its members so as to realize global economic stability, sustainable growth ,To promote financial regulations that reduce risks and stop future financial crises. On March 26, 2020, an extraordinary virtual G20 leaders’ summit took place and discuss global plans to tackle the public health and economic challenges posed by the coronavirus pandemic (COVID-19).

Singapore , spain,europe etc are the which are not a member of G20. Spain should be included by an outsized margin indeed, but the matter is Europe has too many countries that ought to be included, the G20 restricted the countries from Europe to avoid it concentrates half the organisation, and Spain was the colateral damage of restricting European membership.

B) The options of fiscal and monetary resposes are limited in the current situation of COVID 19. Most developed countries have made massive economic responses to the COVID-19 pandemic, ramping up spending and using monetary policy to cushion the blow of lockdowns and other measures that have pack up businesses and left huge numbers unemployed. The authorities increased the frequency of monetary Stability Committee meetings, enhanced the monitoring of early signs of liquidity stress, and reviewed banks’ business continuity plans. Da Afghanistan Bank (DAB) has suspended administrative penalties and fees, postponed the IFRS-9 implementation to June 2021, and froze loan classifications at the pre-pandemic cutoff of end-February.Recent Developments. Ghana's economy continued to expand in 2019 because the half-moon gross domestic product (GDP) growth was estimated at 6.7%, compared with 5.4% within the same period of last year. Non-oil growth was also strong at 6.0%.

C) The breakdown of corona caused shut down of many staes of Africa .It affect economic growth og Ghana ,nigeria and many staes.Due to the production industries shutdown and supply chain disruption America is b;locked from aceesing goods and components.most of the companies were unable to reach thier project locations due to the shutdown and travel bans it was mainly affected to the construction comapnies. Due to thr restrictions in travelling durin the widespread have affected the essential transportations og goods and many countries have cancelled the orders. Ghana has expected a real GDP groeth of 5.8% in 2020but lowered oil price during covid has not realised the expectation. The Ghanian currency was alwyas endangeredc to all political and other reigonal factirs. Inoder to avoid the balance of payment crisis the stae has requested foor financial assistance from IMF and World bank. The country was requested of about USD540 million to balance the financial crisis.


Related Solutions

The World would not be same again. In the last 15 Pandemic events from the 14th...
The World would not be same again. In the last 15 Pandemic events from the 14th century, the world has never remain the same and Covid-19 would not be an exception. The long term economic hangover is just beginning to birth. Though monetary and fiscal measures have been ramped up to ease the short term effect historical trend suggest the long term adverse economic distributional effects could persist for a generation or more. Covid-19 has created huge financing gaps reflecting...
There were 13 that landed on their bases. 4. Using your same data again from your...
There were 13 that landed on their bases. 4. Using your same data again from your 50 tosses, test the claim that the population proportion of Kisses® chocolates that land completely on the base is less than 35% at α = 5% level of significance. a. State the null and alternate hypotheses. Identify the claim. b. State the level of significance. c. Determine the standardized test statistic. (2 decimal places) d. Calculate the P-value. (4 decimal places) e. Make a...
Since the beginning of 2020, the world is suffering from the pandemic. Due to Covid-19, the...
Since the beginning of 2020, the world is suffering from the pandemic. Due to Covid-19, the demand for surgical masks surges rapidly. Assuming firms that produce surgical masks only need machines that produce surgical masks and workers that operate the machines. What do you think would happen to the equilibrium wage and unemployment, if there is no quarantine in place? And if there is? Assuming we are talking about a small closed economy.
The world would be simpler if the US Tax Code and US GAAP were the same,...
The world would be simpler if the US Tax Code and US GAAP were the same, and thus two sets of books would not be needed. Discuss the reasons they are not and whether or not you think it necessary for the present system to remain as it is
In a hypothetical world, between last year and this year, the CPI in Mexico rose from...
In a hypothetical world, between last year and this year, the CPI in Mexico rose from 100 to 115 and the CPI in Russia rose from 85 to 100. Mexico's currency unit, the Peso(MXN), was worth 8.81(MXN) per Canadian dollar last year and is worth 8.73(MXN) per Canadian dollar this year. Russia's currency unit, the Ruble(RUB), was worth 23.28(RUB) per Canadian dollar last year and is worth 23.14(RUB) per Canadian dollar this year. a) Find the percentage change from last...
1. Given events A and B from the same sample space and: P(A) = 0.2, P(B)...
1. Given events A and B from the same sample space and: P(A) = 0.2, P(B) = 0.6, P(A and B) = 0.1. Find the probability: P(A or B). 2. The scores of the class have a normal distribution with a mean of 77 and a standard deviation of 8. Find the 80th percentile score.    a) 85                b) 0.375                 c) 83.7                 d) 84.8
What events in the world impacted the political economy of Latin America from 1492-1825? While you...
What events in the world impacted the political economy of Latin America from 1492-1825? While you will most certainly discuss Europe, please include at least one example from another region of the world.
What impact would a shift in the measurement of training from events delivered or number of...
What impact would a shift in the measurement of training from events delivered or number of attendees to the changes of employees on the job performance?
What impact would a shift in the measurement of training from events delivered or number of...
What impact would a shift in the measurement of training from events delivered or number of attendees to the changes of employees on the job performance?
India’s share in world trade increased from 0.5 to 2% over the last 7 years. The...
India’s share in world trade increased from 0.5 to 2% over the last 7 years. The Government believes that this is on account of the trade policy initiatives. Do you agree? Explain.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT