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Economy can’t contain second lockdown - Experts express opinion

BY: Maxwell Akalaare Adombila
Prof. Peter Quartey — Director, Isser & • Dr Said Boakye — Director of Research, Ifs

Some economic analysts have supported the government’s decision not to impose a second lockdown on Accra and other major cities as part of measures to contain the resurgence in the COVID-19 pandemic.

They maintained that the cost of a lockdown on the public purse and economic activities, when weighed against the fragile nature of the economy, would make the imposition of restrictions injurious.

They told the Daily Graphic in separate interviews yesterday that any imposition of restrictions similar to what happened between March 30 and April 20, last year carried the risk of collapsing the economy through a further slump in financial activities.

They also said such a measure could lead to a rise in unemployment, public spending, inflation, among others.

A professor of Economics at the University of Ghana, Legon, Prof. Peter Quartey and an economist and researcher with the Institute for Fiscal Policy (IFS), Dr Said Boakye, said any attempt to lock down some cities would also require the government to find resources to cushion individuals and businesses.

The two were reacting to President Nana Addo Dankwa Akufo-Addo’s last Sunday night address on the COVID-19 situation which fell short of announcing a lockdown, although it introduced restrictions on some routine activities to deal with the resurgence in infections.

Impact of lockdown

Last year, when the government imposed restrictions on the Greater Accra Metropolitan Area and the Greater Kumasi Metropolitan Area and contiguous districts, some firms were forced to either shut down or downsize their operations, resulting in job and wage losses.

A COVID-19 Business Tracker released jointly by the Ghana Statistical Service (GSS), the World Bank and the United Nations Development Programme (UNDP) last year showed that about 770,000 workers, representing 25.7 per cent of the total workforce, had their wages reduced.

In the 2020 mid-year budget review, the then Minister of Finance, Mr Ken Ofori-Atta, had said the lockdown and the pandemic in general were estimated to cost the country GH¢25.29 billion, equivalent to 6.6 per cent of GDP.

Lack of resources

Given the current health of the economy, with growth at a record low, the debt stock and the deficit bridging their respective thresholds, the experts said, it was apt that the government avoided a lockdown, which they said had the possibility of worsening an already bad situation.

“The government is trying to strike a fine balance between the protection of livelihoods and the maintenance of health, and I think under the circumstances a lockdown would have been more disastrous to the economy,” Prof. Quartey, who is the Head of the Institute for Social, Statistical and Economic Research (ISSER) of the University of Ghana, said.

“I do not think that we have the resources at this time to support the vulnerable and businesses that will be affected by a lockdown,” he added.

Vaccines

Dr Boakye of the IFS said unlike March 2020, when the economy was in a fairly stable situation to be able to shoulder part of the burden of a lockdown, the situation was worse now, with the debt stock, deficit, inflation and growth rates being at grim states.

“So it is better that they are concentrating on enforcing the protocols and limiting social gatherings. Between the two, the latter is less costly,” he said.

He also described as laudable plans by the government to procure 17.6 million COVID-19 vaccines by June this year.