President Nana Addo Dankwa Akufo-Addo says the establishment of the National Development Bank, under the Ghana CARES programme, is to provide support to businesses in Ghana.
He said the government expected a boost in economic activities, which were already picking up, following the ongoing vaccination exercise and the easing of restrictions instituted to curb the effects of the disease for rapid economic growth.
President Akufo-Addo, presenting the State of the Nations Address (SONA)in Parliament on Tuesday, said, “We expect Gross Domestic Product growth to rebound strongly this year to nearly five per cent, above the IMF’s 2021 January projection of 3.2 per cent growth for Sub-Saharan Africa for 2021.”
He said the medium-term outlook, supported by the implementation of the Ghana CARES Programme, was bright and expressed confidence that, together, “we will emerge from the COVID-19 pandemic with a stronger and more resilient economy.”
The President said between 2017 and the first quarter of 2020, the country made considerable gains in the management of the national economy with annual average GDP growth of seven per cent and single-digit inflation.
He said the country also had a reduced fiscal deficit with three consecutive years of primary surpluses, a relatively stable exchange rate, and a significant improvement in the current account with three consecutive years of trade surpluses, strong foreign exchange reserve buffers, markedly reduced lending rates and appreciable job creation.
President Akufo-Addo said according to the COVID-19 Business Tracker survey conducted by the Ghana Statistical Service, in collaboration with the United Nations Development Programme (UNDP) and the World Bank, the COVID-19 pandemic had led to job losses, with many Ghanaian businesses and firms being forced to cut costs by reducing staff hours, cutting wages, and, in some cases, laying off workers.
The survey, again, showed that about 770,000 workers had their wages reduced, and about 42,000 employees were laid off during the three-week partial lockdown imposed on the Greater Accra and Greater Kumasi Metropolitan Areas and their contiguous districts, Tema and Kasoa.
“Government, however, succeeded in protecting the jobs and incomes of all public sector workers,” he said.
He said indeed, the cost of COVID-19 had been enormous and the country’s overall economic growth rate for 2020 was revised downwards from 6.8 per cent to 0.9 per cent.
The President said the non-oil economy was also revised from 6.7 per cent to 1.6 percent with a revenue shortfall estimated at GH¢13.5 billion, with additional expenditures related to stemming the tide of COVID-19 estimated at GH¢11.8 billion, with the combined effect amounting to GH¢25.3 billion, or 6.6 per cent of GDP.
He said the resultant fiscal deficit for 2020 was, thus, revised from 4.7 percent of GDP to 11.4 percent of GDP and that was done to reflect the impact of the pandemic.
The fiscal responsibility rule of keeping a deficit within a threshold of five per cent of GDP and a positive primary balance for every year was suspended in 2020 to enable fiscal operations to accommodate the impact of the pandemic.
President Akufo-Addo said, “I indicated at the time that we know what to do to bring the economy back to life, what we do not know how to do is to bring people back to life,” and said that was why the government did not hesitate to institute measures to protect the lives and livelihoods of Ghanaians, even if it was to the temporary detriment of the country’s much sought-after fiscal stability.