Governor of the Bank of Ghana, Dr. Ernest Addison has said that the outbreak of the coronavirus disease in the country reversed the country’s progress on achieving macroeconomic stability.
Speaking at the 2020 University of Ghana Alumni lecture, which was on the topic, “Pandemic, The Economy and Outlook,” Dr. Addison was unhappy with the rising level of the country’s debt.
He disclosed that the fiscal costs, in terms of stimulus package deployed to moderate the adverse socio-economic consequences on the households and businesses, are estimated at over GH¢11.2 billion.
Dr. Addison continued, saying that if the financial sector costs and the energy sector costs are added, it will raise the figure to GH¢24billion.
“As at half year, it was estimated that the government paid GH¢4.7 billion in excess capacity payments in the energy sector. This has pushed the debt/GDP ratio above the threshold for the Market Access Countries,” he indicated
In view of that, the governor of the Central Bank says that difficult decisions will have to be taken to reorganize public finances and expenditure priorities while exploring more sustainable revenue sources.
He said that the programme of interventions to revitalize businesses and cushion households will have to be defined to scale and there should be no expectation that these should become permanent obligations of government.
“The wide fiscal gap raises important financing issues, and its financing should not be by recourse to central bank funds as this will weaken the central bank’s ability to serve as the anchor of monetary and exchange rate stability,” he added
“The global economy is not out of the woods yet and neither is the Ghanaian economy. The pandemic and its socio-economic impact would be felt long after we have reached herd-immunity and started seeing the full benefits of the success in the vaccines. Which means as public policymakers, we will still be faced with tough decisions that require a response function asymptotic to Pareto principles. The critical decisions that we take will be judged by posterity,” he stressed.
Story by: Jeffrey Nyabor | universnewsroom.com