Economist urges BoG to extend COVID-19 measures to help businesses

Economist, Adu Owusu Sakodie, has suggested that the Bank of Ghana extends its interventions introduced three months ago to support businesses in the wake of the coronavirus pandemic.

The central bank reduced its policy rate which triggered a drop in interest rate among commercial banks to cushion businesses.

In March this year, the Monetary Policy Committee of the Bank of Ghana reduced its policy rate by 150 basis points; from 16 to 14.5%.

Among the reasons that triggered this reduction was the fact that the coronavirus pandemic has impacted economic growth, leaving economic managers uncertain about the future.

This move subsequently led to about 2% drop in interest rate for most commercial banks.

Also, some banks froze interest payments for all customers whose loans matured during the months of March, April, May and June, whereas others deferred loan repayment for their clients.

This has afforded some businesses the opportunity to have access to more liquid to finance other projects.

But as the time elapses, there are concerns as to whether this will be rolled over or exhausted since the banks will also need funds to run their operations.

Speaking to Citi Business News, an Economist at the University of Ghana, Dr. Adu Owusu Sarkodie, said an extension of the incentives will be needed as Ghana’s coronavirus cases keep increasing with its attendant impact.

“The Bank of Ghana will by now be better informed to advise the Finance Minister or government as to whether they should continue with this package, and I think they should continue so that we can help businesses many of whom are collapsing and have laid workers off, and are not making as much profit as needed,” he said.

“The government’s absorption of the water and part of electricity bills also helped to reduce the operation cost of business, and I think that the central bank should inform the government to encourage the continuation of such incentives.”