Coronavirus: Stimulus package needed to jump-start economy – Economist

BY CLASSFMONLINE.COM - Mar 26, 2020 at 1:37pm 100

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Some economists are calling for drastic economic measures from the government to stimulate the economy in the midst of the Coronavirus outbreak.

Though they have welcomed the government’s decision to go to the International Monetary Fund for a Rapid Credit Facility to help fight the COVID-19 pandemic, they want to see stimulus packages for businesses to facilitate economic growth.

The Fund, on Tuesday, said it is evaluating Ghana’s request to fight the COVID-19 pandemic.

Already, the Bank of Ghana is projecting that economic growth will slow down from the projected 6.8% in 2020 to 5.0% in the baseline scenario and even 2.5% in the worst-case scenario.

Economists Courage Boti told Class Business the decision by the government to return to the IMF for a Rapid Credit Facility to help fight the coronavirus pandemic is a step in the right direction.

According to him, although the facility will increase the country’s debt portfolio, it is necessary to mitigate the economic impact of the Coronavirus outbreak.

“We must know that we are not in normal times and we will require drastic measures. Countries around the globe are all stimulating their economies to avoid a hard hit on their GDP for the year. Already, Bank of Ghana is projecting that growth slows from the earlier projection of 6.8% to now 5.0% in the baseline scenario and even 2.5% in the worst-case scenario.”

“To avert such growth, we will have to spend; and also, I’m even expecting addition to the monetary stimulus from the Bank of Ghana, extra fiscal stimulus from the government to stimulate growth because during this period, there will be low aggregate demand, productivity will fall. We need stimulus from the central government, we need stimulus from the monetary authorities to jump-start the economy again.

“So, obviously, debt will grow but it will be for a good reason that we want to maintain economic activities at their normal level. COVID is hitting hard, not only lives but economies and we need to respond our way out of it.”