The Head of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana has asserted that the best action by government to prevent the collapse of businesses in the country is to continue supporting these firms through stimulus packages.
According to Prof. Peter Quartey, government should try to find resources to protect businesses from folding up as this is the strategy being employed by many countries around the world. He indicated that, even though this may push up the budget deficit, the unpredictable times we are in calls for this action. Albeit, he cautioned government to put such funds into appropriate ventures.
“Government’s policy response should be to continue to provide stimulus packages as and when it is able to find money, because that is the way to go. Many countries are doing this. And as much as we should be concerned about the size of the deficit, we are not in normal times so we ought to continue to find money and spend judiciously.
“You will find in South Africa for instance that, their budget deficit in narrow basis is around 14% of GDP. That tells you that other countries are trying as much as possible to stimulate the economy. That is the way to go. Provide the support as quickly as possible and ensure that businesses don’t go bust.”
The Prof. is making this call because he has projected a higher number of business closures than what has been publicised by the Ghana Statistical Service (GSS) as a result of COVID-19.
The GSS in a latest survey as to how businesses have fared in these turbulent moments found that 80,000 firms have shut down as a result of COVID-19. Also, over 40,000 job losses, according to the GSS, have been recorded.
But according to Professor Quartey, current instances show the situation may be worse than what has already been revealed by the GSS.
Ghana’s initial response to the COVID-19 pandemic was acclaimed as a success story. This early moments were captured in a statement President Akufo-Addo made in his first broadcast to the nation on 28 March, 2020, in which he announced Africa’s first lockdown.
He said:
“We know how to bring the economy back to life. What we do not know is how to bring people back to life.”
The President’s statement reverberated around the globe.
However, regardless of the necessity of the lockdown, the three weeks lapse in economic activity in the country has had a damaging toll on the economic outlook of the country.
Finance Minister, Ken Ofori Atta, has been consistent in lowering how optimistic he is about the prospects of the country’s economy.
In his first visit to Parliament in March to brief the nation about the government’s policy direction to curb the impact of the pandemic on the economy, he revised downward the country’s GDP growth to 1.5% from over 6%. Also, in his mid-year budget review, the prospects of economic growth in the country was reduced to 0.9%.
