Spend stimulus package on critical projects to revive operations – KPMG to businesses
Anthony Sarpong - KPMG Ghana
A senior partner at KPMG Ghana, an auditing firm, Anthony Sarpong has advised businesses likely to benefit from the government’s stimulus package to spend it on critical projects that will revive their operations.
According to him, the fund must not be seen as free money and spent on unplanned projects.
Mr Sarpong believes the fund could not have come at a better time to support Micro, Small and Medium Enterprises to mitigate the negative impact of the Coronavirus pandemic than this.
“If you have businesses that really can take care of today’s needs then you can go ahead and expand your business but the key thing is that whatever you do as a business, work and plan within the limit of your cash flow”. he said.
According to him, the stimulus fund is an emergency fund which means that the government has realized the challenge facing businesses and as a result, has provided a lifeline to boost their operations.
“This should be a mindset for businesses to know that this is a fund to bring you to life and not free money in the sense that you can spend it anyhow but for boosting your business on critical areas that can allow you to continue to operate. By this, you can be able to bring back the business once again and pay back the government while your business is sustained as well,” he advised.
In a bid to cushion Ghana’s economy of the impact of coronavirus, the Government has made available a stimulus package of a minimum of GHc 1 billion to households and businesses, particularly small and medium scale enterprises.
This was announced by President Akufo-Addo during his address to the nation on updates to Ghana’s enhanced measures towards the coronavirus pandemic.
The President also mentioned that commercial banks are effectively responding to the Bank of Ghana’s reduction in the policy rate by 150 basis points, to 14.5%, decrease in the policy rate and 2.0 per cent in reserve requirement with a GHc 3 billion facility.
The BoG in its assessment indicated that the negative impact of COVID-19 on exports, imports, taxes, and foreign exchange receipts will culminate in a slowdown in economic activity.
Hence, GDP growth is forecasted to decline to 5.0 per cent in a baseline scenario.
In the worst-case scenario, GDP growth estimates could be halved to about 2.5 per cent this year.
Further to the stimulus package, the President indicated that the government will be providing additional relief, such as the extension of the tax filing date from April to June; a two per cent reduction of interest rates by banks, effective April 1, 2020.