The World would not be the same again. In the last 15 Pandemic events from the 14^th century, the world has never remained the same and Covid-19 would not be an exception. The long-term economic hangover is just beginning to birth. Though monetary and fiscal measures have been ramped up to ease the short-term effect historical trend suggests the long-term adverse economic distributional effects could persist for a generation or more. Covid-19 has created huge financing gaps reflecting dwarf domestic mobilization and elevated health-related and economic stimulus intervention. The IMF (2020) states more than ever, Sub-Saharan African countries also need large-scale external financing. The International Monetary Fund and the World Bank estimate that the region faces a government financing gap (assuming a modestly supportive fiscal stance) of at least $114 billion in 2020. African governments cannot mobilize this amount domestically. The World Bank and the African Development Bank (AfDB) despite the uncertainty surrounding the AfDB presidency have been stepping up financing. Recently, G20 announced an important initiative to suspend debt-service payments until the end of 2020 for poor countries that request relief though some countries have expressed reservations and their unwillingness to sign up for this initiative. Here in Ghana, the macro-fiscal impact of Covid-19 is well documented and reflected in the projected GDP decelerating from 6.8% in the 2020 budget to the worst scenario of 1.5% given the partial lockdown and the fiscal deficit escalating to GHS 30.2 billion from GHS 18.9 billion. Bank of Ghana has in response to the impact of Covid-19 given the elevated fiscal deficit adopted an Asset Purchase arrangement under a Quantitative Easing (QE). The Central Bank indicated it stands ready to support the government with GHS 10 billion in the wake of the coronavirus pandemic. Out of this, the Bank has already purchased a Government of Ghana COVID-19 relief bond with a face value of GH5.5 billion at the Monetary Policy Rate with a 10-year tenor and a moratorium of two (2) years (principal and interest). Ghana like many other countries is in the second stage of Covid-19 where we have decided to live with the virus, unlike the first stage where the focus was on containment and the last stage when the vaccine is developed hopefully.

1. Describe the exchange rate regime Ghana is operating given the above development

b. Discuss how external development accounts for the depreciation of the cedi and in your view whether this development is temporary