Editorial : Uncertain economic times ahead…

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As several African countries are using lockdowns to control the COVID-19 virus’ spread, they will also negatively affect economic growth on a continent which has had some of the world’s fastest-growing economies in recent years, a World Bank report indicates.

Last week, an African Union report said that nearly 20 million jobs on the continent “are threatened with destruction”.

The World Bank predicts that, overall, sub-Saharan Africa’s economy will be between 2.1% and 5.1% smaller by end of the year. However, what is even more daunting is that the report also raises the spectre of “a severe food security crisis” as agricultural production and imports fall.

Oxfam has also hinted that the economic fallout from coronavirus could increase global poverty by up to half a billion. The report notes that the economic crisis is potentially going to be even more severe than the health crisis itself.

The Oxfam report estimates a 400-600 million rise in poverty numbers globally. The report also says the virus poses a real challenge to the United Nations Sustainable Development Goal of ending poverty by 2030.

Stark but real indications of times ahead, once this novel coronavirus plague has been surmounted. It is for this reason that Finance Minister Ken Ofori-Atta, is impressing on China to do more to help ease the debt burden of African countries facing economic calamity due to the coronavirus pandemic.

“African debt to China is US$145billion or so, and over US$8billion of payments is required this year… So that needs to be looked at,” Ofori-Atta stated.

African governments are calling for US$100billion in assistance, including support for a moratorium on all external debt and eventually some debt write-offs. Chinese Foreign ministry spokesman Zhao Lijian responded positively by stating that China will never force countries facing debt difficulties to pay willy-nilly, but “will resolve it through consultation via bilateral channels”.

China itself was the first casualty of COVID-19, but managed to stem the tide through concerted and collective efforts that were decisive and swift. Bearing this in mind, we believe the Chinses authorities will have an open ear if African countries present a convincing case backed by hard evidence.

The International Monetary Fund (IMF) and World Bank are also calling for wealthy nations to suspend payments on bilateral debt owed by poor countries. This week’s World Bank and G20 meetings are an important opportunity for world leaders to collaborate on a joint economic rescue package to protect the most vulnerable.

Strongly backing this assertion, Majority Leader in parliament Osei Kyei-Mensah-Bonsu notes that the various interventions government is undertaking to ease the financial burden of Ghanaians are already taking a toll on the economy, and this will get worse if the pandemic persists beyond four months.

His concerns were made in the context that some people feel government’s intervention does not go far enough, and are advocating for government to also absorb electricity bills. The Majority Leader stated that even though government is considering the calls for a reduction in electricity tariffs, it can only be done if there are enough funds to cater for that. His submission supports the Institute of Energy Security, which said last week that that the availability of enough funds to cushion revenue shortfall is the only way government can reduce electricity tariffs.

President of IMANI Ghana, Franklin Cudjoe, also waded into the debate and observed that the Ghanaian economy will fold-up if government gives free electricity to its people as part of efforts to deal with effects of the coronavirus infection.

Cudjoe consequently appealed for the public to be considerate in their demands from government during this period.

This Paper concurs with such sentiments, since an old adage has it that “there is no free lunch anywhere”. These freebies are necessitated because of the extraordinary times that we find ourselves in today because of the outbreak of coronavirus, and it is imperative to observe a partial lockdown in order to contain rapid spread of the virus with its dire consequences.

Therefore, Ghanaians need to be measured in their demands for more freebies, even though we appreciate the fact that with very little economic activity permitted people are bound to face hardships, and it is reasonable that government should cushion those bound to be highly affected by the lockdown.

But comparing it to what neighbouring countries like Togo are offering and demanding the same might be stretching the argument a bit too far. We ought to be grateful that in spite of our meagre resources, the state has found room to come to the aid of businesses and absorbed some utility bills like water for three months.

We cannot eat our cake and have it!

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