Government has directed Cabinet to commence work on coming out with a broader and more comprehensive stimulus package to re-ignite the Ghanaian economy as a result of the mitigating impact of Coronavirus Disease (Covid-19).
This new package is aside the already approved Ghc1.2 billion stimulus package earlier announced by President Nana Akufo-Addo containing measures being taken to limit the effect of the disease. However it is still unclear how the package will be financed as government is currently hard pressed to fund the stimulus package already approved by Parliament. One possible source is the various voluntary donations being made by private enterprises. There is also the possibility of financing becoming available as a result of significant debt relief through suspension of debt servicing obligations on debts owed to bilateral and multilateral development partners as called for by African finance ministers and both the World Bank and the International Monetary Fund.
The move for a broader stimulus package – largely for businesses and households – has become necessary as government assesses that the continuous impact of the Coronavirus is expected to hit the economy even harder than originally anticipated and as such it is imperative to reinforce the economy to withstand any further shocks.
No timelines have been announced on when cabinet is expected to finish drawing up the extra stimulus package.
Loss of jobs is one major shock this global pandemic is ravaging on world economies and countries in sub-Sahara Africa are likely to be the most affected. Job protection is therefore a major consideration in whatever plans are being drawn up in Ghana.
According to a report by the International Organisation (ILO), it states that the rapidly intensifying economic effects of COVID-19 on the world of work are proving to be far worse than the 2008-9 financial crisis, with cutbacks equivalent to nearly 200 million full-time workers expected in the next three months alone.
The latest Africa’s Pulse report – the World Bank’s twice yearly economic update in the region also states that growth in Sub-Saharan Africa has been significantly impacted by the ongoing coronavirus outbreak and is forecast to fall sharply from 2.4 percent in 2019 to a contraction growth rate of between 2.1 percent to 5.1 percent this year, being the first recession in the region over the past 25 years.
The World Bank’s Vice President for Africa, Hafez Ghanem is cautioning that African countries are likely to be hit particularly hard by the pandemic.
“We are rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term – including calling for a standstill on official bilateral debt service payments which would free up funds for strengthening health systems to deal with COVID 19 and save lives, social safety nets to save livelihoods and help workers who lose jobs, support to small and medium enterprises, and food security”, Mr. Ghanem noted as captured in the report.
The World Bank is recommending that African countries should initiate policies aimed at saving lives and protecting livelihoods by focusing on strengthening health systems and taking quick actions to minimize disruptions in food supply chains. It again recommends implementing social protection programs, including cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector.
It is estimated to that COVID-19 will cost Sub-saharan region between US$37 billion and US$79 billion in output losses for 2020 due to a combination of adverse effects. They include trade and value chain disruption, which impacts commodity exporters and countries with strong value chain participation; reduced foreign financing flows from remittances, tourism, foreign direct investment, foreign aid, combined with capital flight; and direct impacts on health systems, and disruptions caused by containment measures and the public response, the report added.