The Head of the Economics Department at the University of Ghana, Prof. William Baah-Boateng, is urging government to restrain itself in the disbursement of its extensive financial packages to individuals and businesses as the country continues to face the economic impact of the novel Coronavirus pandemic.
According to him, although there is the need to support distressed companies, government must critically assess which businesses to support.
Speaking on Citi TV’s Point of View, he called on government and businesses to be more strategic in their operations so as to restore economic activities and ensure that monies are spent wisely.
“So, what we do? This is where innovation comes in. They say necessity is the mother of invention. From government’s perspective, it will not be best to use the stimulus package just to buy goods and services for people to consume. That will not be the best. I am expecting the stimulus package to help businesses to start something and solve those challenges that they are having. I have a bit of a challenge when you want to use the stimulus package to pay some of the salaries. What will we get in return if we pay salaries? So, we don’t have to just sit down, fold our arms and expect that government will come in and pay part of our salaries,” he said.
“For instance, I am looking forward to see a situation where employers will not just lay off workers like that but will look at the situation and say, if I pay you 100 cedis, looking at the situation, I will spread that kind of money so that everybody gets something,” he added.
He further asked government to consider the timing of the disbursement of the packages as the pandemic is not yet over, stating that it should be meticulous in its support to businesses.
“There is a time frame also, because, I am not talking about just giving the money right now. As we find ourselves, we are still having the pandemic. Therefore, if you give the money, there is also a problem with demand. So, you have to weigh it with the time frame as well. If we don’t take care and give that kind of stimulus package to the small and medium enterprises, they may use it for other things. We have to look at the timing as well and ensure that if there is going to be a stimulus package, it is going to be used to ignite the engine of economic activity and get our firms running,” he stated.
Gov’t Interventions for COVID-19
Following the outbreak of novel Coronavirus in Ghana which necessitated a partial lockdown on Accra, Tema, Kasoa and Kumasi, most businesses in the country’s major economic centres slowed down, thereby tightening financial conditions.
Though the partial lock-down has been lifted, some stakeholders believe it will take time for these business to get back on their feet.
President Akufo-Addo already announced a GHS600 million soft loan scheme with a two-year repayment plan to support micro, small and medium scale businesses.
The Finance Committee of Parliament has given authorization to the Minister of Finance to spend GHS1.2 billion from the Contingency Fund.
The Finance Minister has also asked for the support of Parliament to amend the relevant laws to lower the cap of the Stabilization Fund from US$300 million to US$100 million to enable the government use the excess funds to bridge the gap created by the economic impact of the pandemic.
There’s also a request to amend the Petroleum Revenue Management Act to use portions of the Ghana Heritage Fund to help the fight against the virus.
Externally, the International Monetary Fund (IMF), has approved a disbursement of US$1 billion to Ghana to help address the urgent fiscal and balance of payments needs that Ghana is facing in the wake of the novel Coronavirus pandemic.
