MAXWELL OPOKU Afari, 1st Deputy Governor of the Central Bank, says resetting Ghana’s economy back to resilience would be a gradual process over the next two or three years and would require a collective and collaborative support, as well as burden sharing.
Dr. Opoku-Afari was speaking at the 5th CEOs Summit held recently in Accra, on the theme, ‘Resetting Ghana’s Economy: Policy Response & Strategies for Building a Resilient Economy Post-Covid Pandemic.’
He indicated that the economic costs of the Covid shock, in terms of foregone growth and its implications for employment and poverty reduction, infrastructural development, and economic expansion, were enormous and would require carefully crafted strategies to reset the economic agenda back to stability and growth.
“Lessons drawn from other countries on ‘building back better’ from the pandemic indicate that a flattened Covid-curve is a necessary condition prior to massive rollout of policies and strategies designed to reset the economy.
“Reason being that subsequent Covid flare-ups could potentially slow the recovery process,” he mentioned.
He prescribed certain short-term strategies to reset Ghana’s economy. These included sustaining the flattened Covid-curve i.e. prioritising policies in the health sector and other supportive measures including testing, tracing and treatment, alongside mass vaccination rollouts to continue to achieve some form of herd immunity.
He said the flattened curve would keep the economy open for business, provide some certainty to the economic outlook, and prevent diversion of resources to any resurgence of the pandemic.
Also, he said Covid policy responses to sustain the ongoing V-shaped recovery should be maintained, adding that “Already, the implementation of these policies has spurred some recovery evidenced by improvement in the bank’s high frequency economic indicators for the first quarter of 2021.”
“Inflation has eased and declined back to single digits in April 2021, the exchange rate remains relatively stable, business and consumer confidence has bounced back, and the bank’s high frequency indicators have rebounded to near pre-pandemic levels. Also, the banking sector remains strong with the support of the macro prudential measures and continues to play its intermediary role to boost growth efforts, post Covid,” he revealed.
He added that “Over time, strategies should include innovative and actionable macroeconomic policies to unwind the Covid-related fiscal excesses and lower the public debt to sustainable levels. Broadly, prudent fiscal policies would be needed.
“The 2021 Budget has already reset fiscal policy on a consolidation path with the deficit projected to decline to 9.5 per cent of GDP and unwind over the medium-term to 5 per cent by 2024. This would ensure medium-term debt sustainability.”
To achieve such fiscal targets, he said domestic revenue mobilisation through tax reforms had been given some prominence, adding that the ongoing national digitisation programme would be supportive.
The 1st Deputy Governor continued that “Already, the Ghana Card and TIN numbers are merged, broadening the tax base. Over time, this is expected to result in some revenue gains for the government,” adding that “Expenditure rationalisation programmes that are pro-growth and promote value-for-money projects would also be critical.”