The Bank of Ghana (BoG) says it fears the Coronavirus pandemic (COVID-19) will collapse growth in the economy to 2.5 per cent in 2020.

The BoG said the 2.5 per cent growth rate would be a “worst-case scenario” impact from the challenges of the disease on the local economy.

In a statement issued Wednesday, the BoG said “GDP growth is forecasted to decline to 5.0 per cent in a baseline scenario. In the worst-case scenario, GDP growth estimates could be halved to about 2.5 per cent in 2020. These assessments are preliminary as the situation is very fluid and the degree of uncertainty concerning the outbreak is very high.”

According to the BoG, “These assessments are preliminary as the situation is very fluid and the degree of uncertainty concerning the outbreak is very high. This means that there is a likelihood that these assessments could change rapidly.”

The latest inflation reading for February 2020 is estimated at 7.8 per cent, unchanged from January 2020.

The forecast for inflation is expected to remain within the target band for the next quarter.

In the 2020 budget, the economy was projected to grow at 6.8 per cent.

ADDITIONAL MEASURES

 In addition, the following raft of measures to contain the impact of the COVID-19 on the Ghanaian economy will be implemented.

  • The Primary Reserve Requirement has been reduced from 10 per cent to 8 per cent to provide more liquidity to banks to support critical sectors of the economy. This effectively extends the previous targeted reserves for SMEs under the enterprise credit scheme to all critical sectors.
  • The Capital Conservation Buffer (CCB) for banks of 3.0 per cent is reduced to 1.5 per cent. This is to enable banks to provide the needed financial support to the economy. This effectively reduces the Capital Adequacy Requirement from 13 per cent to 11.5 per cent.
  • Provisioning for Loans in the “Other Loans Especially Mentioned” (OLEM) category is reduced from 10 per cent to 5 per cent for all banks and Specialised Deposit-Taking Institutions (SDIs) as a policy response to loans that may experience difficulty in repayments due to slowdown in economic activity. Provisioning norms for loans in all other categories are maintained. This should provide capital relief to banks and SDIs in these uncertain times.
  • Loan repayments that are past due for Microfinance Institutions for up to 30 days shall be considered as “Current” as in the case for all other SDIs.

MOBILE MONEY TRANSACTIONS

The Bank of Ghana has agreed with banks and mobile network operators on measures to facilitate more efficient payments and promote digital forms of payments for the next three months, subject to review, effective March 20, 2020.

These are:

  • All mobile money users can send up to GH₵100 for free (excluding cash out). This includes sending to a recipient on the same network, or another network via the interoperability platform.
  • All mobile phone subscribers are now permitted to use their already existing mobile phone registration details to be on-boarded for Minimum KYC Account.