Finance Minister Ken Ofori-Atta has told Parliament during the delivery of the mid-year budget statement on Thursday, July 29 that the Akufo-Addo administration took bold and decisive measures to deal with the negative impact of the covid on the economy.
Mr Ofori-Atta told the House that the huge negative impact of covid on the global economy was to be expected because no country around the world expected a pandemic of this magnitude.
However, he said governments around the world including that of Ghana acted with prudent measures to deal with the situation.
“The hardship of covid 19, the stress, negative impact on employees and employers was unprecedented but expected because no country in the world had prepared for it.
“We took responsible, innovative and decisive and bold actions to tackle the crisis,” he said.
As part of efforts to deal with the effect of the covid on the local economy, the central bank unexpectedly cut its benchmark interest rate to the lowest in more than nine years to support the recovery of the economy.
The monetary policy committee reduced the rate to 13.5% from 14.5%, Governor Ernest Addison told reporters on Monday in Accra, the capital. All four economists in a Bloomberg survey expected the rate to remain unchanged.
Ghana’s central bank was one of the first in sub-Saharan Africa that stepped in last year by cutting lending rates to shield the economy from the fallout of plunging oil prices and lockdowns to curb the spread of the Covid-19 pandemic. While the 150 basis-point cut announced in March 2020 was the last monetary policy support it provided and output expanded at the slowest pace in 37 years, the West African economy still fared better than most of its peers, where gross domestic product contracted.
Economic activity has picked up strongly, even as new taxes that were implemented this month weighed on consumer and business confidence, Addison said. GDP could expand by 4.6% this year, according to International Monetary Fund projections.
Inflation dropped to a 13-month low of 8.5% in April, moving close to the centre of the central bank’s target range as food-cost growth eased. That’s after the rate was above the target band of 6% to 10% for most of the past year. The MPC expects the rate of price growth to reach the midpoint of the target range by June.
Positive moves in the economy and the direction of inflation, as well as the fact that the risks associated with last year’s election are over, gave the MPC room to bring down the policy rate to signal progress, Addison said.