ghananlpcommunity/ghana-gov-speeches-sentences huggingface dataset:
In addition to the rate cuts, central banks in advanced economies embraced other unconventional measures such as direct lending programmes to small and medium scale enterprises to b oost economic activity.
To safeguard liquidity in the financial sector, central banks also provided short-term interbank lending facilities and resumed massive asset purchase programmes to ensure the smooth functioning of financial markets and credit flows.
In the United States, fiscal policy measures took the form of direct support to firms and households, credit/Loan Guarantees such as the emergency grants and loan forgiveness programs for SMEs (launched by the U.S government), also known as the Paycheck Protection Program under the CARES Act, and other measures such 10 | P a g e as the Families First Coronavirus Response Act (FFCRAA), extension of tax filing deadline for individuals and businesses, deferment of student loan repayment by six months and Refundable tax credit for all businesses to cover wages for employees unable to work due to the COVID-19 pandemic.
Similar measures were implemented across other advanced economies.
The policy response in the emerging market economies was no different.
A multiplicity of unconventional policy actions were taken and these included direct foreign exchange intervention to stem volatilities in the exchange rate, direct lending to SMEs, granting of loans to financial institutions, foreign exchange SWAP transactions, lowering reserve requirements, Asset Purchase Program s, direct lending to exporters, easing of capital conservation buffers, among others.
At the last count, at the beginning of the third quarter, EMDEs had utilized 12 different unconventional tools to stem the impact of the pandemic on their economies.
In emerging market economies, central banks intensified foreign exchange interventions to smoothen 11 | P a g e currency volatilities following deteriora ting financial market sentiments induced by Covid-19.
Across Sub-Saharan African (SSA) countries, policy responses to the pandemic varied depending on country specific conditions, but not distinctly different from those in advanced and emerging market economies.
Remarkably, monetary and macro -prudential policies were eased to support economic growth and provide adequate liquidity in the financial systems.
Amid limited fiscal space, most central banks in the region, with inflation well contained, cut poli cy rates to support the recovery process, with some bringing it down to historical lows.
For instance, Ghana cut the policy rate by 150 basis points, South Africa 275 basis points, Uganda 200 basis points etc.
Central banks also introduced a variety of facilities to inject liquidity into the banking system, with some lending directly to targeted sectors.
Botswana, South Africa, Kenya and Malawi, many more announced lower reserve or liquidity requirements for commercial lenders to encourage more lending.
12 | P a g e 14.
In addition to the policy rate cuts and liquidity measures, some central banks encouraged banks to work with their clients to re - structure their obligations to the banks.
These range from a temporary moratorium on loan payments (Botswana, Namibia, São Tomé and Príncipe,) or through a restructuring of existing obligations (Botswana, Eswatini, Ethiopia, Kenya, Namibia, Nigeria, Uganda).
Some central banks have also relaxed prudential constraints, for example, by easing capital requirements (Botswana, Ghana) o r by delaying the transition to Basel III norms (West African Economic and Monetary Union).
With higher spending, lower revenues, reduced external funding, and waning investor appetite for government debt, some sub - Saharan African countries have already tapped the central bank to help fund their crisis spending during the lockdown (Democratic Republic of the Congo, Ghana, Mauritius), according to IMF.
Many central banks with enough reserve buffers also intervened in the FX 13 | P a g e markets to stem exchange rate vo latility arising from the capital flows reversals by providing extra liquidity to the domestic financial system.
Many countries encouraged the use of digital money, leveraging on the digital money platforms, to help channel cash payments.
This included measures such as increasing the transaction limits and removal or reduction of fees.
There was also direct fiscal support to a large proportion of vulnerable households and businesses.
Transfers to households took the form of food distribution, school meals, lowering of the utility bills and tax waivers.
Given pre-existing economic fragilities, huge financing gaps, and weak health infrastructure in most African countries, it became clear that additional financing would be needed to dampen the adverse effects of the pandemic in these countries.
Ladies and Gentlemen, the size of financial support needed to combat the adverse economic consequences of the pandemic prompted several countries to apply for financial assistance from the multilateral agencies.
According to IMF estimates, official creditors mobilised up to US$57 billion for 14 | P a g e Africa—including US$18 billion from the IMF and the World Bank — to provide frontline health services, support the poor and vulnerable, and keep economies afloat in the face of the worst global economic downturn since the 1930s.
So far, the IMF’s total Emergency Financing for some 28 Sub-Saharan African countries was estimated at US$9,977.76 million (SDR 7,281.17 million).
Furthermore, some 20 African countries benefited from debt reli ef estimated at US$251.24 million.
The data for the first half of 2020 showed that the global economy experienced a sharp contraction due to restrictions imposed to contain the spread of the Covid-19 pandemic.
However, survey data into the third quarter of the year pointed to signs of recovery driven by the easing of restrictions and decisive monetary and fiscal policy support.
The recovery is however expected to be gradual and uneven in view of the cautious behaviour of both households and firms.
Also, Covid-19 containment measures vary across countries and the recoveries will reflect these variations.
15 | P a g e 18.
Despite these early encouraging signs of recovery, t he outlook for the global economy remains highly uncertain.
The C ovid-19 infections continue to increase as countries ease restrictions, sparking fears of a second and even third waves of infections, requiring re -imposition of restrictions and leading to further slowdown in the world economy.
The recent resurgence of the pandemic in the United States and parts of Europe lends credence to the uncertain path of the pandemic in the near-term.
Also, events related to the spread of the COVID -19 pandemic are still evolving and there is considerable uncertainty about the duration of the spread and how quickly countries will recover.
The IMF forecasts that global growth will contract by 4.4 percent in 2020 (IMF WEO, October 2020 update).
If this materialises , the C ovid-19 pandemic may possibly become one of the most economically costly pandemics in recent history.
16 | P a g e 19.
These notwithstanding, the recent announcement of coronavirus vaccines with more than 90 percent efficacy, and the subsequent approval to administer these vaccines in the United Kingdom and other advanced economies has fuelled optimism and restored some hope about a ‘return to normalcy’ in the near -term.
Already, coronavirus vaccines are being administered in China, Russia, Brazil and United States .
This positive news of Covid -19 vaccine has boosted global economic recovery prospects in 2021 and beyond.
The Ghanaian economy and COVID-19 pandemic 15.
At this stage, Fellow Alumni, I would like to shift the focus to how the Covid-19 pandemic impacted the domestic economy and delve into the various decisive and co-ordinated policy measures taken to moderate the financial and economic costs.
Ladies and Gentlemen, the Ghanaian economy ended 2019 on a sound footing, before COVID-19 came knocking.
This followed the successful implementation of a sound macroeconomic framework 17 | P a g e with fiscal consolidation and prudent monetary and exchange rate policies over the last three years, which had yielded good outcomes.
Inflation at 7.9 percent was within the medium-term target band of 8±2 percent, the exchange rate was relatively stable, the current account had improved significantly alongside three consecutive years of trade surpluses of US$2.26 billion , and the Bank of Ghana had built strong foreign exchange reserve buffers of US$8.42 billion.
In addition, economic growth had rebounded strongly to 6.5 percent, supported by growth-oriented government policy initiatives to boost agriculture and manufacturing.
In the financial sector, the Bank of Ghana had successfully concluded three years of banking sector reforms, which saw an increase in the minimum capital requirement, revocation of licences of insolvent institutions (“banking sector clean-up”), and a complete overhaul of the regulatory and supervisory frameworks.
The clean- up resulted in a stable and resilient banking and SDIs sector that is well capitalised, liquid, and solvent.
By the end of 201 9, all the 18 | P a g e financial sector soundness indicators showed improvements .
The overall capital adequacy ratio for banks had increased to 20 percent well above the regulatory requirement.
The Non -performing loans ratio had declined from 21.3 percent at the end o f December 2017 to 15.3 percent.
Liquidity in the industry had improved and profitability has been on the uptrend.
We had also seen a significant increase in the use of digital financial services , thanks to some of the measures instituted including National Financial Inclusion and Development Strategy, the Digital Financial Services Strategy, and the Cash -Lite Policy .
This policy framework was intended to scale up access to financial services from 58% in 2015 to 85% by 2023 through increased digital financial services that will help promote economic empowerment of the poor and marginalized.
So, with the strong economic fundamentals, a sound and stable financial sector, as well as fairly developed payment system 19 | P a g e architecture, Ladies and Gentlemen, Gh ana was prepared to consolidate the gains made with reforms over the past three years even in the face of challenges that typically arise during election years—a track record badly needed to shape Ghana’s story to the international investors.
But as the Bible puts it “many are the plans in the heart of a man, but it is the purpose of the Lord that prevails”.
This well-thought through objective was shattered, if I am allowed to use that word, with the unprecedented and unexpected shock that came with the adv ent of the coronavirus on the Ghanaian people.
The real ramifications of this shock and the extraordinary demands on the government as the guardian of public safety and welfare became severe after several weeks.
The first two Covid-19 cases were imported into the country on 14th March 2020, and it did not take long for the numbers to start multiplying, first from Accra, Kumasi , and on to the other regions .
Following the steady increase in the Covid-19 cases and the threat of weakening an already burdened health sector, the Government 20 | P a g e imposed a three-week partial lockdown, beginning March 30th, in the major cities of Accra and Kumasi, as a containment measure to stop the spread.
Akin to other country experiences, this proved to the game changer and led to a sudden stop in economic activity.
Educational institutions , transport services, the airport, recreation centres, and hotels and restaurants, were all shut down.
In addition, manufacturing companies scaled back operations, workplaces were closed except for key staff, while markets operated at half capacity.
Now, this partial lockdown had tremendous impact on economic activity, household incomes, government revenues , and job s as companies laid off staff or cut back wages and salaries.
The first inkling of the adverse effect of Covid-19 was felt in the prices of goods and services.
The announcement of a lockdown triggered panic buying as households stocked up on goods across the city centres of Accra and Kumasi, resulting in a sharp increase in headline inflation from 7.8 percent in March to 10.6 percent in April, 21 | P a g e and further up to 11.3 percent in May 2020 due to the astronomical jump in food prices.
The Economic and Financial shock 22.
Ladies and Gentlemen, the economic impact of C ovid-19 presented as both demand and supply shocks to the domestic economy.
On the supply side, there were disruptions in productive activities as employees fell victim to the virus, while disruptions to global supply chains led to shortage of raw materials and inputs for manufacturing activity, which led to increased cost of production including costs associated with adoption of new health and safety protocols.
On the demand side, companies experienced weak consumer demand due to closure of businesses and job losses.
With these constraints, major businesses faced difficulties in honouring obligations such as staff compensation, suppliers’ credit, utility bills, and servicing loans with financial institutions.
22 | P a g e 23.
Fellow Alumni, the Covid-19 also impacted the economy as an external shock through the contraction of trade, fall in commodity prices, tourism and international capital flows.
By the second quarter of the year , the full effect of the pandemic was showing in slower growth in domestic economic activity , adversely impacting livelihoods, and threatening to erode the economic and financial stability gains achieved over the preceding three years.
The developments placed severe constraints on government finances, arising from significant revenue shortfalls on the back of weakened domestic economic activity and the collapse in international crude oil prices, coupled with increased government expenditures due to C ovid-related spending.
The larg e informal economy, which in the past used to provide a cushion to such shocks, this time around amplified the shock as the lockdowns brought a halt to informal activities as well.
Therefore, providing a sense of security to market participant s and the public required close coordination between various stakeholders and implementation of monetary, 23 | P a g e fiscal, and macro prudential policies to limit the impact of the pandemic on the broader economy.
The Fiscal Response 25.
Obviously, t he onset of C ovid-19 outbreak brought intense pressure on government fiscal operations, pushing the economy off the consolidation path as the Government took actionable steps and instituted program mes to moderate the social and economic consequences.
In addition to the lockdowns and border closures, the government had to increase health and social assistance spending, including direct transfers to households (including food distribution), several relief packages such as tax waivers for frontline health workers, stimulus packages for small and medium-scale enterprises, absorption of utility bills (electricity and water), etc.
Government introduced an Emergency Preparedness and Response Plan of GH¢560 million 24 | P a g e (US$100 million).
Clearance was given to increase staff in the health sector by employing 24,255 health workers for testing, tracing and treatment.
Government also refurbished 10 treatment centres across the country, introduced a GH¢10.3 million insurance package for health workers and livelihood preservation programme targeting 4.1 million households and 682,522 businesses.
To close the funding gap arising from these actions, government assessed a US$1 billion IMF Rapid Credit Facil ity as expenses for Covid-relief measures ballooned.
Bank of Ghana Responses 26.
To complement government’s Covid-relief measures, Distinguished Ladies and Gentlemen, the Bank of Ghana also announced a series of policy and regulatory measures to loosen financing conditions, ease liquidity pressures and keep credit flowing to support critical sectors of the economy.
 The Bank of Ghana cut the monetary policy rate by 150 basis points to 14.5 percent in March 2020 and worked with 25 | P a g e commercial banks (through moral suasion) to transmit the same measure of decline to lending rates.
 The Bank also reduced primary reserve requirements to 8 percent from 10 percent to increase liquidity in the banking system.
 The Bank of Ghana reduced the Capital Conservation Buffer (CCB) of banks by 1.5 percentage, implying an effective drop of capital adequacy requirement (CAR) from 13 to 11.
5 percent.
 The provisioning requirements for the spectrum of loan categories was reduced from 10 to 5 percent, which helped to ease liquidity conditions and provided capital relief to banks.
26 | P a g e  Urged the commercial banks to provide a 6 -month moratorium on principal paym ents on loans due from customers in the worst-hit sectors of the economy.
 The Bank also suspended Dividend payments by Banks for the year 2020 to secure capital buffers.
 The Bank provided assurance to strengthen the capacity of the ARB Apex Bank to provide liquidity support for rural and community banks facing temporary liquidity challenges.
 It also extended the deadline for SDIs (MFIs and RCBs) to meet new capital requirements to December 2021 from the earlier deadline date of 28th February 2020.
 Similarly, loan repayments that were past due for Microfinance Institutions for up to 30 days were reclassified as “current”, as pertains to all other sectors.
27 | P a g e  The Bank also reduced the cash reserve requirement for Rural and Community Banks (RCBs), Savings and Loans Companies (S&Ls), Finance Houses from 8 to 6 percent, and from 10 to 8 percent for microfinance companies;  In order to encourage the use of digital forms of payments, the Bank agreed with banks and mobile money operators to the elimination of transaction fees on mobile money transfers of up to GHȼ100 and revision of transaction limits upwards to further promote the use of digital solutions, such as mobile money and online transactions.
Fellow Alumni, besides these monetary policy and macro prudential measures, the Bank also triggered its Asset Purchase Programme in line with emergency provisions in th e Bank of Ghana Act, 2002 (Act 612) as amended, and purchased a Government of Ghana Covid-19 relief bond with a face value of GH¢10 billion at the 28 | P a g e Monetary Policy Rate with a 10-year tenor and a moratorium of two (2) years (principal and interest) in May 2020.
In this context, banks and SDIs were required to:  Activate business continuity and disaster recovery plans to ensure full time access to banking services during the period of the outbreak and restricted movements, and to review these plans on a continuous basis.
 Ensure full functionality of all electronic channels and that ATMs do not run out of cash.
 Develop C ovid-19 Contingency Plans to help assess and identify the possible risk scenarios and mitigating measures to deal with the scenarios, including crisis management plan that seeks to map out specific actions to be taken based on Covid- 19 case thresholds.
29 | P a g e Assessing the Impact of Covid Policy Responses 29.
Distinguished Ladies and Gentlemen, Ghana faced multi -layered shocks with the advent of the pandemic, including domestic economic disruptions due to containment measures, and the challenging global environment which induced global supply disruptions and weakened demand for exports.
Broadly, the impact of the pandemic reflected in negative growth rates, declining GDP per capita across most African countries, which almost wiped out 5- 6 years of economic progress by the third quarter of 2020 and increased extreme poverty.
In addition to the sl ower growth, fiscal pressures bec ame elevated, necessitating a revision of the 2020 projections for the economy.
Amid weak external demand, and domestic C ovid- containment measures, it became very necessary to revise the macro framework for Ghana with the G DP growth projection for 2020 revised downward to 0.9 percent from the pre -Covid projection of 30 | P a g e 6.8 percent while the fiscal deficit was revised up to 11.4 percent of GDP, from the earlier projected 4.7 percent of GDP in 2020.
With a significant slowdown in growth and a widening budget deficit, the economy was facing the prospect of instability without the appropriate measures to provide additional financing.
 Economy gradually turning around 31.
Ladies and Gentl emen, Bank of Ghana on the basis of recent available data believes that the economy is on a rebound.
And that this rebound can be attributed to the evidence of some green shoots in economic activity gleaned from the Bank of Ghana’s surveys on consumer confidence which had bounced back to pr e-lockdown levels as consumers responded favourably to the gradual lifting of restrictions—providing some scope for undertaking meaningful economic activities.
Business confidence has also improved although the Index remained below pre -lockdown levels.
Our latest high frequency economic indicators, such as consumer spending, 31 | P a g e industrial consumption of electricity, and construction activities have all reached pre-lockdown levels.
Just yesterday, the Ghana Statistical Service put out an estimate of the third quarter GDP growth suggesting that the economy contracted by 1.1 percent during the third quarter.
It must be pointed out that this is consistent with the rebound view as the economy has recovered from a contraction of 3.
2 percent to 1.1 percent during th e quarter.
Recent report from the International Growth Centre (IGC) corroborates this view as employment rates and hours worked per adult which fell substantially in March and April have largely reverted to its pre -Covid levels in August and September.
Hea dline inflation also eased to single digits at 9.8 percent in November.
 Financial sector resilience remains intact 33.
In the financial sector, the policy and regulatory relief measures introduced by the Bank of Ghana have enhanced liquidity in the 32 | P a g e banking system, preserved capital buffers, and provided relief to customers severely impacted by the pandemic.
These measures have also helped banks and specialised deposit -taking institutions provide support to critical sectors of the economy to mitigate the adverse impact of the pandemic.
To start, the downward adjustment of the monetary policy rate impacted positively, and average lending rate of banks has steadily declined to 20.9 percent in November 2020 from 24.0 percent last year.
Banks have also signalled a net easing of credit stance on enterprises’ loans in the months ahead as new advances steadily rise.
Ladies and Gentlemen, the banking sector remains liquid and well- positioned to support growth , benefitting significantly from the recent reforms.
To a large extent, the policy interventions have also helped improve soundness of the banking sector and reduced the potential adverse spillback effects that the banking sector may have had on the macro-financial landscape.
The sector remains robust as reflected by the strong Financial Soundness Indicators – Capital 33 | P a g e adequacy levels are above the regulatory limits , the NPL ra tio has declined, and profitability remains strong.
As part of financial sector surveillance, Fellow Alumni, the Bank assessed the resilience of the banking system to credit and liquidity shocks emanating from the pandemic.
The findings revealed that, overall, the banking sector is robust and largely resilient to the pandemic-related shocks .
In addition, tail risks arising from the changing macroeconomics landscape has had a moderate effect and the banking sector soundness index has improved from the pre- pandemic levels.
Broadly, the prompt policy response to the COVID- 19 pandemic, including the freeze on dividend pay-out, reduction in the Cash Reserve Requirement, and the reduction in policy rate supported the sector to build reserves to withstand credit shocks.
The post-COVID outlook 36.
At the Global level, there is beginning to emerge a consensus that the recovery process will be prolonged due to significant scarring of 34 | P a g e the economy.