The Ghana Employers’ Association (GEA) is pushing the Bank of Ghana to direct commercial banks to loan out excess liquidity derived as a result of COVID-19 interventions introduced by the Central Bank to only businesses affected by the outbreak of the pandemic.
“Bank of Ghana should redirect that excess funds accrued by the commercial banks due to the regulator’s interventions including reduction in reserve ratios be advanced to only COVID-19 affected businesses,” the GEA said in its review of the 2020 Mid-Year Review of the Budget Statement and Economic Policy of Government.
Measures including, reduction of the Primary Reserve Requirement from 10 percent to 8 percent, reduction of the Capital Conservation Buffer (CCB) for banks from 3 percent to 1.5 percent, reduction of provisions for loans in the Other Loans Especially Mentioned (OLEM) category from 10 percent to 5 percent for all banks and SDIs meant that, there would be excess capital to provide the needed financial support to the economy.
The Central bank was categorical in its communication to the bank that, the money cannot be used for any other thing but lending but the GEA believes that a stricter guideline from the BoG that these excess funds be directed to businesses affected by the pandemic directly would be far more beneficial to the economy.
The GEA also wants government to expedite action on the necessary administrative arrangements required to enable businesses access the GH¢2 billion Guarantee Facility and GH¢150 million additional funds allocated to the Coronavirus Alleviation Programme Business Support Scheme.
Again the employers are calling for stakeholder engagements to critically discuss and examine the proposed National Unemployment Insurance Scheme (NUIS), especially regarding its funding as well as and the huge informal sector of Ghana’s economy.
“GEA is of the view that the NUIS is a good initiative and has the potential of stimulating economic activity and job creation in the economy during periods of economic downturn. The initiative however requires a critical review by all stakeholders to determine the benefits and ramifications for the Ghanaian economy and businesses as well as draw lessons from jurisdictions that have tried in the past to implement similar policies,” the GEA review statement said.
According to the association, the 2020 Budget Statement has become necessarily expansionary and are urging that the financial resources required to finance the deficit be sourced strategically to ensure Ghana’s return to the stable macro-economic trajectory on which it was, pre-COVID-19; saying “the economy in general and the private sector needs this badly.”
The GEA review paper signed by the Chief Executive Officer, Alex Frimpong, wants government to work with business associations to identify indigenous businesses and support them to locally produce intermediate goods and raw materials to fill the supply chain disruptions created by the pandemic now and into the future.
According to the GEA, this will reinforce the government’s import substitution goals and structurally transform Ghana’s economy. They proposed areas to look at in this regard include, agro-processing, pharmaceuticals, textiles and garments and the integrated aluminum industry, given that aluminum is the metal of the future.
In appreciating all the policy revisions made to the 2020 Budget Statement to contain the spread of the COVID-19 pandemic and support businesses, and the economy to recover rapidly in order to keep the Ghana Beyond Aid Agenda on course, the GEA is confident that stakeholders will be involved in quickly fashioning out an effective execution system so that the laudable stimulus/relief packages established can be readily accessed by businesses to keep them afloat and enable them to retain their staff.
