Question

As part of the measures to contain the impact of the coronavirus pandemic on the Ghanaian economy, the Bank of Ghana adjusted its key monetary policy measures. Examine these key measures adopted by the Bank and show how they will help the country withstand the pressures from the pandemic. Support your answers with relevant examples as well as facts and figures.

Answer 1

Ans.

- Current pandemic has impacted many world economies and key impacts of the COVID-19 pandemic on the global economy are that many economies including Ghana have suffered huge loss in the GDP , no country is spared and most of the global economies are forecasting significant reduction in world output

- Aggregate demand represents the quantity of goods and services that households, businesses, government, and foreign customers want to buy at any given level of prices.

- Because of current pandemic many global economies are facing twin shocks of Demand Shock and Supply Shock. Unemployment has increase sharply and globally almost 2.6 billion people are impacted. In many countries the unemployment has increased many fold.

- Government has taken the following monetary measures :

o Reduced key loan fee to 8-year low from 16% to 14.5%;

o Bringing down reserve requireents for moneylenders from 10% to 8% so as to give liquidity backing to important industries in economy

o Abatement in the banks' conservation buffer from 3% to 1.5%, which cuts the capital-sufficiency proportion from 13% to 11.5%.

o Approached the IMF for a fast dispensing of a credit office to enable the nation to confront the negative financial effect brought about by the Covid-19 episode.

o The Bank of Ghana has chosen to diminish the expense of reserve moves through mobile money, so as to maintain a strategic distance from a low in exchanges. Plus, no mobile money exchanges beneath GH100 (USD18) will be charged by administration providers for the following three months.