Magnitude of coronavirus impact prompts fiscal response – Deputy BoG Governor

The Deputy Governor of the Bank of Ghana has indicated that the impact of the coronavirus has compelled central banks to implement extraordinary responses.

According to Dr. Maxwell Opoku-Afari, governments have had to first secure lives and reduce the social and economic burden from the pandemic, particularly on the vulnerable in society.

“Massive fiscal response packages and supportive monetary policy measures have been implemented in many countries to deal with the fallouts from the crisis. However, in most low-income countries (LICs), the situation has been complicated as most LICs are confronting the crisis under conditions of elevated debt profiles and high debt service payments,” Dr Opoku-Afari said.

“Although the scale of the crisis requires massive additional financial support to safeguard progress towards the SDGs, elevated debt levels and the accompanying high debt service payments means that much of the support will rather fund debt obligations and limit the ability of LICs to respond to the crisis. This has necessitated calls for suspension of debt obligations and debt forgiveness in some instances and there are major risks inherent in this approach,” he added.

He made this known while speaking during a virtual event on the Debt Sustainability Panel, CGD Conference on Financing Low-Income Countries on the theme “Towards Realistic Aspirations and Concrete Actions in a Post-COVID 19 World” on Monday October 5.

The outbreak of the coronavirus pandemic has hugely impacted global demand and supply chains, increased debt stocks as well as caused some disruption in vast economies.