Governor of the Bank of Ghana (BoG) Dr Ernest Addison has said the government was very swift in its response to the effect of the Coronavirus pandemic on the local economy.

He said also that president Nana Addo Dankwa Akufo-Addo provided excellent leadership by rising up to the challenge that the Pandemic had brought to the economy.

Dr Addison explained that the government decided to do “whatever it takes” to minimize the impact of the Pandemic on citizens including a stimulus package of over GHc11.2 billion to address the social and economic consequences.

To complement the fiscal policy actions, the Bank of Ghana deployed its various tools, namely interest rate tool, macro-prudential policies, market liquidity support, and triggered its emergency financing clause to purchase a Government COVID-19 Bond, Dr Addison said 2020 Annual Dinner of the Chartered Institute of Bankers (Ghana) on Saturday, November 28 in Accra.

He told the bankers that “2020 has been a difficult year. After three years of prudent management of the Ghanaian economy, we ended the year 2019 with significant consolidation of fiscal policy, a decline in the rate of inflation, robust build-up of international reserves of the central bank, and stability in the exchange rate. Then come beginning of 2020; the Ghanaian economy was hit with an external shock, the Covid-19 Pandemic, which impacted negatively on global trade, commodity prices, tourism and international capital flows.

“Apart from the public health challenges associated with the Pandemic, it also brought in its wake unprecedented economic consequences with disruptions in global supply chains, and heightened uncertainty in global financial markets. The imposition of restrictions disrupted economic activity. The Pandemic led to general anxiety, volatile expectations, and unprecedented levels of uncertainty, all of which weighed heavily on public policy, at the centre of which is macroeconomic management.”

He added “The Government was very swift in its response and His Excellency the President provided excellent leadership by rising up to the challenge that the Pandemic had brought to the economy. The Government decided to do “whatever it takes” to minimize the impact of the Pandemic on citizens including a stimulus package of over GHc11.2 billion to address the social and economic consequences. To complement the fiscal policy actions, the Bank of Ghana deployed its various tools, namely interest rate tool, macro-prudential policies, market liquidity support, and triggered its emergency financing clause to purchase a Government COVID-19 Bond.

“Specifically, the Bank of Ghana introduced the following regulatory and policy interventions: The Monetary Policy Rate was reduced by 150 basis points to 14.5 percent to complement fiscal policy and provide support to economic growth; The cash reserve requirement (CRR) ratio for banks was lowered from 10 to 8 percent to provide additional liquidity to Banks. This policy measure was expected to free up additional resources of about GHS2 billion for banks and SDIs to lend to critical sectors of the economy; The CRR for RCBs, S&Ls, Finance Houses was reduced from 8 to 6 percent; and from 10 to 8 percent for microfinance companies;

“The Capital Conservation Buffer was reduced by 1.5 percentage points to 11.5 percent and providing capital relief of about GHS1.1 billion for banks; The provisioning requirements for loans categories was reduced from 10 to 5 percent and which translates to about GHS115.3 million in capital relief to Banks; Restrictions were imposed on dividend and other capital distributions for the financial years 2019 & 2020 to preserve liquidity and capital buffers; The deadline for new capital requirement for SDIs (MFIs and RCBs) was extended to December to provide temporary relief to SDIs, given current economic conditions;

“The Bank of Ghana requested Banks to grant 3-12 months moratorium on principal payments on loans granted to customers in the worst pandemic-hit sectors; A reduction in mobile money charges and waiver of transaction fees on minimum transactions (GHS100) and increased wallet limits was agreed with the TELCOS to promote electronic transactions as part of COVID protocols; The combination of these measures translated into a relief of more than GH¢4.0 billion to the economy, and with multiplier effects strong enough to provide the necessary impulse required to contain threats of recession and support economic recovery efforts post COVID-19.”