Government policy response to COVID-19

Since COVID-19 pandemic hit the world economies in 2020, it has been the core mandate of every government to take the necessary steps to address its adverse economic impact. As a result, governments have adopted several strategic measures that will help mitigate the socio-economic effects of this global disease.

Ghana for instance, has employed crucial techniques that transcends through monetary, fiscal and regulatory policies in its battle against COVID-19.

Ghana detected its first 2 cases of COVID-19 in March 12, 2020. As of August 23, 2021, the total number of cases have increased significantly to 103,019.

As part of government’s regulatory measures to help reduce and contain the spread of COVID, President Akuffo-Addo restricted foreign nationals from entering the country a day after he announced social distancing. He further closed all points of entry into the country i.e Sea, Land, Air. On 27^th of March 2020, President Akuffo-Addo declared a partial lockdown in major cities of country which lasted more than 3 weeks.

President Akuffo-Addo then announced that the main 5 objectives of the fight against COVID-19 are to limit and stop the importation of the Corona Virus, to contain the spread of the virus and to provide adequate care for patients. The additional objectives are to limit the social and economic impacts of the virus and to also expand domestic capability and promote Ghana’s self-reliance.

In the course of attaining these objectives, Ghana increased its health expenditure by 2 billion cedis constituting 0.5 percent of GDP. This was used to provide Personal Protective Equipment (PPE), medical equipment and treatment. The cost incurred to quarantine inbound travelers is also covered under the expenditure.

Moreover, according to the International Monetary Fund (IMF) Article IV, the expenditure was made to also procure testing kits, begin community engagement and to build health infrastructure.

Meanwhile, 37 thousand health workers were employed, government granted income tax waiver and life insurance to government health personnel.

Fiscal support

The Akuffo-led government provided fiscal assistance of about 1.8 percent of GDP amounting to about 6.8 billion cedis.

According to the IMF, the fiscal support comprised subsidized water and electricity tariffs to households and provision of food packages and hot meals. It also covered soft loans to SMEs, security-related spending, including evacuations of Ghanaians abroad. Other areas included seed funding for a new development bank, payments to contractors and transfers to statutory funds. The government also launched a four-year Ghana CARES program to support the economic recovery.

Lowering monetary policy basis points

With regard to monetary policy, the Central Bank of Ghana lowered the policy rates twice by 150 basis points (bps) in March 2020 and 100 bps in May 2021, respectively.

Bank of Ghana (BoG) further reduced reserve requirements from an initial 10 percent to 8 percent. With respect to the IMF Article IV, the Central Bank raised lending to government by 4.4 percent of GDP, including 2.6 per cent of GDP under the new Asset Purchase Program (APP).

IMF further outlined some of the macro and micro-prudential requirements that BoG relaxed as part of the measures to cushion businesses. These include: halving the capital conservation buffer to 1.5 percent, easing of loan provisioning and classification rules and suspending bank dividend distributions.

Delaying new capital requirements for special deposit-taking institutions (SDIs), and taking steps to promote digital payments were also some the measures. Additionally, individual banks unilaterally extended temporary moratoria for specific loans and sectors.

Recent COVID-19 developments

The Ghana Statistical Service COVID-19 monitoring dashboard indicates that as of August 23, 2021, there are 103,019 total cases recorded. Out of these cases, 6,466 are active cases which represents 6.3 per cent of the entire cases documented.