01.05.2020 Opinion

How Does Ghana’s COVID-19 National Trust Fund And Other Foreign Interventions Benefit The Poor Ghanaian Amidst This Pandemic

By Malise Otoo
How Does Ghana’s COVID-19 National Trust Fund And Other Foreign Interventions Benefit The Poor Ghanaian Amidst This Pandemic
01.05.2020 LISTEN

The World Health Organization has defined COVID-19 as an infectious disease caused by a newly discovered coronavirus which spreads primarily through droplets of saliva or discharge from the nose when an infected person coughs or sneezes. It says, most people infected with the Covid-19 virus will experience mild to moderate respiratory illness and recover without requiring special treatment.

In the wake of this pandemic, the International Monetary Fund announced a number of stimulus packages to reduce the devastating nature of the pandemic on emerging markets and lower-income economies around the world.

Some of these interventions included a $1 Trillion loan to its member countries which comes from three main sources including $440 Billion from its quotas, $196 Billion Multilateral borrowing arrangement, and $344 Billion of Bilateral borrowing arrangement.

The IMF also explained that some US$ 1 Trillion which was mainly to support developing and low-income countries who are the worst hit by this pandemic to protect the health of their people and the health of the economy. It is made up of approval by the IMF Board in direct response to the Covid-19 crisis of enhancements to its Containment and Relief Trust (CCRT) of about US$70 Billion pledged with about 70% of that raised during the virtual meeting, that is US$11.7 Billion and US$600 Million further approved.

The funds Managing Director, Kristalina Georgieva in an interview with Tom Keene of Bloomberg during this year 2020 Spring Meeting in Washington described the disease as, 'a crisis like no other. It is the worst we've seen since the great depression. It requires extraordinary action by everyone including by International organizations like the IMF. Our message is two folds, ''we must fight the virus and protect people. It is first and foremost a human tragedy due to that health crisis so Governments ought to do what they can to support health workers and health systems. So the faster we beat the virus, the faster a recovery can begin.

Secondly, she said that ''because it is such a gigantic, dramatic development, a virtual standstill of the world economy, it requires massive well-targeted measures. We see Governments globally stepping up, up till that moment US$ 8 Trillion of fiscal stimulus and Central Banks including the fund here doing a heroic job. That has to continue but we need to remember that there are countries that don't have such capabilities, and for that the IMF, the World Bank we ought to step up and we do. We have a Trillion dollars capacity, all of it is at the disposal of our members and we are moving very rapidly responding to the extraordinary flow of request. Over 90 countries never in the history of the IMF have faced such a demand and we are very fast to act. So health first, on that basis revive the economy.''

The Fund in its latest Regional Economic Outlook for Sub-Saharan Africa states that Sub-Saharan Africa is faced with unprecedented health and economic crisis and the Covid-19 outbreak threatens to exact a heavy human toll, damage businesses, and slow the region's growth for years to come.

By this outlook, the region's economy will shrink by a record 1.6% this year, with real per capita income falling by 3.9%, the lowest since 1970.

The Government of Ghana also announced a three week partial lockdown in some epicenters of the country namely Accra, Kasoa, Tema and Kumasi.

On the 12th March, 2020, the President of Ghana, Nana Addo Dankwa Akufo-Addo in his first public update to the Nation since the pandemic, announced a US$100 Million package to enhance Ghana's coronavirus preparedness and response plan to be used to fund expansion of infrastructure, purchase of materials and equipment and public education.

According to the President, ''Government is analyzing the potential impact to our economy of the virus, and will trigger the relevant response to minimize it. We have begun to engage with the domestic pharmaceutical industry to assist in producing as much of the logistics required to prevent and combat the virus as is possible under the circumstances.''

''Indeed, we must take advantage of this crisis to strengthen our domestic productive capacity, so we can advance our self-reliance, and reduce our dependence on foreign imports. Necessity they say is the mother of invention'', he said.

In his fourth address to the state, the President said that as a responsive government, they'll continue to implement bold measures to mitigate the impact of the coronavirus on businesses and households and ensure that job losses are minimized.

''The Minister of Finance has been directed by me to prepare, for approval by parliament, a Coronavirus Alleviation Programme to address the disruption in economic activities, the hardship of our people and to rescue and revitalize our industries'', he said.

The Minister of Finance according to him will then make available a minimum GHS1 Billion to households and businesses, particularly small and medium scale enterprises (SMEs).

Following this announcement by the President, Ghana's Finance Minister, Ken Ofori-Atta as part of the Presidents directive presented a Coronavirus Alleviation Programme (CAP) to the parliament of Ghana, a statement which describes the economic impact of coronavirus on the economy of Ghana while highlighting how these interventions will be laid to cushion the ordinary Ghanaian.

Ghana applied to the fund for her share of the Special Drawing Rights and on the 13th April 2020, the Fund approved an amount of US$1 Billion through its Rapid Credit Facility.

The IMF in its release to the press after Ghana's approval said the disbursement will help address the urgent fiscal and balance payments needs that Ghana is facing, improve confidence, and catalyze support from other development partners.

Later the following month, the IMF loan of $1 Billion also hit the vaults of the Bank of Ghana.

In addition, the President informed citizens that the commercial Banks are responding to the 1.5% decrease in the Policy Rate and 2% in reserve requirement with a GHS 3 Billion facility to support industry especially in the pharmaceutical, hospitality, service and manufacturing sectors.

Also, the President of Ghana says with the Bank of Ghana predicting a worse-case GDP growth rate scenario of 2.5% for 2020, should the virus continue to linger for the rest of the year, the effects on the economy will be dire. However, he was optimistic for a country now growing on average 7% over the last three years from an inherited and transformed economy of 3.4% that the economy will bounce back.

Through the coronavirus Alleviating Programme (CAP), the Ministries of Gender, Children and Social Protection and Local Government and Rural Development, and the National Disaster Management Organization (NADMO) together with faith-based organizations began a nationwide provision of food for up to 400,000 individuals and homes in the various epicenters.

An insurance package with an assured sum of GHS350, 000 ($60,000) for each health personnel and allied professionals at the frontline and a GHS150 ($27) daily stipend to Contact tracers was also announced.

Utility bills including water and electricity for three months namely April, May and June have been waived by Government.

A Covid-19 National Trust Fund has been set up with former Chief Justice, Her Ladyship Sophia Akuffo as the Trustee. The President, Vice President, Ministers and other members of his Government donated their April salaries as their contribution.

The fund according to the President has currently an amount of GHS 8.7 Million (including US$600,000) received so far.

However, the poor Ghanaian is yet to experience the full benefit of these foreign interventions and monies flowing into the country's coffers. Some of the interventions the President announced was a GHS600 Million soft loan scheme which has a one-year moratorium and a two-year repayment period for micro, small and medium scale businesses with many of them living in the informal sector wondering in limbo as to when exactly these funds will be disbursed by Government together with the National Board for Small Scale Industries (NBSSI), Business and Trade associations and other commercial and rural Banks.

A large part of Ghana's workforce specifically about sixty percent can be found within the Informal sector and therefore most of these businesses find this intervention crucial and are on edge to see these funds distributed fairly without any ill motive or political consideration. The issue of accountability s also been recently by Civil Society like the Ghana Anti-Corruption Coalition and other interest groups coming up with press releases on the need for government to be fully accountable to the people of Ghana and ensure transparency especially on donations that are still being made by corporate organizations and other individuals in the country.

Ghanaians also generally think that social protection will also be needed to help those whose livelihoods have been suspended and who live mainly on a daily sustenance.

ModernGhana Links

Join our Newsletter