As Ghana considers various options to raise funds to finance its fight against the COVID-19 pandemic, some analysts say all possibilities can be considered including financing by the Bank of Ghana if the country’s economy can support it.
The International Monetary Fund, IMF, as part of measures to prevent a high budget deficit placed a cap on Bank of Ghana’s financing of government budget by not more than 5 percent of the previous year’s national debt.
Even though the provision has not been explored for some years now, Economist, Dr. Lord Mensah, told Citi Business News the Bank of Ghana can print money to help government’s fight against the COVID-19 due to the pressure on public finance.
“Whatever incentive we are going to provide or subsidiary the government intends to provide will boil down to the Central bank diving into its coffers, if there is not enough or contingencies that the country has. I mean if we don’t have contingency, then in house, there is nothing wrong if we print money to satisfy the immediate needs of the country,” he suggested.
He further explained that the country has been struggling in terms of liquidity already, so this could be a better option.
“The reason why I am saying this is that Ghana was already struggling, liquidity wise. We were having serious problems with liquidity and you could see all the measures that we were putting in place, before the COVID 19 was to ensure that the banks are liquid and we never got there before COVID-19 came in. So, if you ask me that the Central Bank can print money for that purpose, it depends on the production capacity of the economy as well,” he added.
Following the outbreak of the novel coronavirus in the country, government has taken various steps to help mitigate the economic impact of the pandemic on businesses and individuals.
With the cumulative impact of the COVID-19 pandemic expected to cost Ghana GHS9.505 billion, President Akufo-Addo has announced that all households and small to medium scale enterprises are to benefit from a stimulus package of one billion Ghana cedis.
He also announced the establishment of a COVID-19 Trust Fund which he says has so far received GHS8,750,000 in donations.
The Finance Committee of Parliament has given authorization to the Minister of Finance to spend GHS1.2 billion from the Contingency Fund.
Current situation in the country
Currently, Accra, Tema and Kumasi are under a two-week partial lockdown which started on Monday, March 30, but has been extended by one more week, effective 13 April, 2020.
So far, Ghana has recorded 566 COVID-19 cases with 8 deaths and 3 recoveries.