First Deputy Governor of the Bank of Ghana (BoG), Dr. Maxwell Opoku-Afari has disclosed that government adopted a “whatever it takes” stance to minimize the impact of Covid-19 on Ghana’s economy.
According to him, the policy stance culminating in some GHc21 billion being spent on Covid-19 last year.
He was speaking at a workshop organized by the Journalists for Business Advocacy (JBA) under the theme, “Understanding the Monetary Policies in a Post Pandemic Era”.
Dr. Opoku-Afari noted the government stance in managing Covid-19 stemmed from the president’s globally acclaimed statement that government knows how to bring back the economy to life but could not bring restore human life, so it had to do “whatever it takes” to preserve human life.
The First Deputy Governor noted that the Central Bank deployed various tools such as the interest rate tool, macroprudential policies, market liquidity support, and the purchase of a Government COVID-19 Bond as part of strategies to manage the impact of the pandemic.
Dr. Opoku-Afari said the BoG fell on its policy space from gains of over three years of strong monetary policy reforms to help close the residual financing gap of the budget arising from increased COVID-related spending and to prevent an inefficient tightening of domestic financial conditions arising from market conditions,
According to him, the central bank did this by triggering the emergency clause of the BoG Act 2002, Act 612, to allow the central bank purchase Government of Ghana COVID-19 relief bond at GH¢10 billion in line with provisions of the Act as amended Act 918.
“But we had to stagger the release of the funds to government in two chunks to prevent a negative impact on inflation resulting from excess cash in the economy,” he said.
In addition, BoG directed commercial banks to provide various reliefs to customers through reduction in lending rates, moratoria on loan repayments, restructuring of existing loans, and advancement of new loans to customers.
“Broadly, these actions have helped to moderate the economic impact of COVID-19 on customers and minimised the potential disruptions in credit flows,” he said.
Ghana’s economy, according to him, is entering a new phase of its macroeconomic developments with low inflation and well-anchored expectations.
“The Bank of Ghana will continue to pursue prudent policies to safeguard its primary objective of price stability. The Bank’s inflation forecast strongly the low inflation expectations going forward.”
He indicated that some policy and regulatory interventions were further adopted similar to those implemented elsewhere in the world.
The First Deputy Governor stressed that the central bank will continue to implement policies consistent with its inflation targeting framework to entrench the current low inflation environment.
Meanwhile, President of JBA, Sulley Mustapha urged the BoG to make the training for journalists an annual affair so that journalists could have a better appreciation of BoG’s policy interventions and play their advocacy role properly.
Dr. Opoku-Afari happily welcomed their idea of annual training for journalists, and urged them to put the policy interventions of BoG in managing the Covid-19 impact at the center stage of the public discourse to enable the public better appreciate the benefits.
“We do not expect you to stop the critics but at least shape the narrative by better informing the public about the various positive policy interventions and the benefits thereof,” he said.