Dr. Prince J. Adjei & Dr. Hene Aku Kwapong thoughts … Suspend Debt-to-GDP Ratio concerns and save the economy from the impact of COVID-19


Governments and policy makers must focus on saving lives and economies at all cost without regard to Debt to GDP ratios. We are in a very difficult time globally. The world is faced with a serious pandemic that’s ravaging all economies. World economic giants are all scrambling to stop the free fall of their economies as well as to save lives.

In Ghana, President Nana Addo and his government continue to take unprecedented steps to minimize the impact of the Coronavirus pandemic , particularly efforts to prevent the spread and eventual death of citizens.

Pandemics of this magnitude normally are not factored into national budgets under normal circumstances. You can speak of contingencies in national budgets, yes, but the effect of this pandemic could not have been factored into any national budget. This is an unprecedented time that require governments and policy makers to attack it with all tools available, including breaking long held fiscal measures, if necessary.

With the government providing expansive stimulus to support businesses ( right move), support to citizens in the form of government paying second quarter utility bills for citizens, financial institutions taking actions to support their customers, all aimed at curbing the impact of the pandemic on humans and businesses alike. It’s in light of these that we argue that policy makers and government must not be constrained by established fiscal measures in the discharge of their duties during this difficult time.

Collapse in commodity prices in recent times, expensive financial sector clean up and now dealing with this health crisis- will add stress to national purse but that should not prevent our policy makers and government alike, from acting to save us from COVID-19.

Yes, fiscal restraint is important and must be practiced and observed at all cost but not at the cost of human life. If it means crossing all regulatory fiscal thresholds in the name of evidently saving lives of all Ghanaians, we support such action. Large economies like the US, are currently running a 100% plus debt- to- GDP ratio. We must take all necessary steps to save of citizens and the economy. Heathy citizens would become productive agents when we return to normal times and bring back any cost we incurred in saving their lives.

The Ghanaian economy must be saved at all cost. Government and policy makers must do everything they can to save the economy from collapsing. It is prudent for the government to borrow to fund essential spending like providing life line to businesses, if the alternative is devastation and calamity.

If the government is too constrained by borrowing levels hence limiting necessary fiscal stimulus needed to keep the economy afloat, it would become way too costly in the future to restart the economy when the pandemic is finally over. We certainly can’t afford a repeat of the 1970s economy.

The government and policy makers in Ghana have shown strong dexterity in managing the economy, hence it must not allow the ghost of debt levels derail such expertise.

According to the April 2020 World Economic Outlook published by the IMF, since the Great Depression, this is the only time that all economies- advanced, emerging and developing, is in recession.

Growth rate is estimated to be -6.1 percent for advanced economies, emerging and developing economies are projected to grow at the rate of -2.2 percent if you exclude China. These numbers must be a reminder that policy makers have no choice than to take unprecedented measures to save their economies from failing during this pandemic.
To paraphrase President Nana Addo’s statement, we can bring back the economy and hence debt to GDP ratio, but not dead citizens.

Let it not be said that we were fiscally conservative at the expense of our citizens – The Ghanaian people and the Ghanaian Economy.


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