The Central Bank in its last Monetary Policy Committee (MPC) meeting released an assessment of the adverse impacts of COVID-19 on Ghana’s economy.
With the global pandemic already halving Ghana’s oil revenue projection, other key areas of the economy expected to be hit are exports, imports, foreign direct investments and foreign exchange receipts, thereby, culminating in a decline in the country’s economic activity.
The Bank of Ghana (BoG), per its assessment, forecasts a Gross Domestic Product (GDP) growth decline to 5.0 per cent from a 6.8 per cent growth projection in a baseline scenario, and a further decline to 2.5 per cent in a worst case scenario.
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But with so much ‘doom’ hovering around the nation’s economy, there is something businesses in the country can be happy about, which is the cut in monetary policy rate (benchmark interest rate) from 16 per cent to 14.5 per cent as well as the reduction in commercial bank’s Primary Reserve Requirement from 10 per cent to 8 per cent.
With the monetary policy rate now at 14.5 per cent, businesses in the country can now borrow more cheaply from banks to undertake activities.
Also with banks having to now keep just eight per cent of their total cash instead of 10 per cent with BoG, more funds will now be made available to businesses to operate with.
The above short term measures implemented by the Central Bank form part of efforts to help stimulate economic activity and minimise the negative effects of COVID-19 on the economy.