The International Monetary Fund (IMF) has approved the disbursement of one billion dollars (US$1 billion) to Ghana to help fight COVID-19.
The money which was drawn from the IMF's Rapid Credit Facility will help the country address its fiscal needs and also help in improving confidence in the economy in the wake of the pandemic.
“The COVID-19 pandemic is already impacting Ghana severely. Growth is slowing down, financial conditions have tightened, and the exchange rate is under pressure.”
“This has resulted in large government and external financing needs. The authorities have timely and proactively responded to contain the spread of the COVID-19 pandemic in Ghana and support affected households and firms,” the IMF remarked.
The IMF said it was still monitoring Ghana’s situation and is ready to provide policy advice and further support as needed.
Following the Executive Board’s decision, Mr Zhang, Deputy Managing Director and Chair issued a statement, further indicating;
“The budget deficit is projected to widen this year given expected lower government revenues and higher spending needs related to the pandemic. The Fund’s emergency financial assistance under the Rapid Credit Facility will help address the country’s urgent financing needs, improve confidence, and catalyze support from other international partners.”
“The authorities’ response has been timely, targeted, and proactive, focused on increasing health and social spending to support affected households and firms. The Central Bank has recently taken steps to ensure adequate liquidity, preserve financial stability, and mitigate the economic impact of the pandemic while allowing for exchange rate flexibility to preserve external buffers.
“The uncertain dynamics of the pandemic creates significant risks to the macroeconomic outlook. Ghana continues to be classified at high risk of debt distress. The authorities remain committed to policies consistent with strong growth, rapid poverty reduction, and macroeconomic stability over the medium-term. Additional support from other development partners will be required and critical to close the remaining external financing gap and ease budget constraints.”
Deputy Managing Director and Acting Chair, IMF - Mr Tao Zhang
Why the support from IMF?
The Ghana government had earlier turned to the International Monetary Fund for financial support to aid in the country’s fight against COVID-19.
The IMF in a press release on March 24, 2020, disclosed that the government had requested a rapid credit facility disbursement.
According to IMF’s African Department Director, Abebe Aemro Selassie is quoted as saying: “Last week, the IMF received Ghana’s request for a disbursement under the Rapid Credit Facility to help the country address the economic impact of the COVID-19 pandemic”.
“We are working hard to evaluate the authorities’ request and bring it forward for Executive Board consideration as soon as possible,” the statement added.
Abebe Aemro Selassie - IMF’s African Department Director
About the Rapid Credit Facility (RCF)
The Rapid Credit Facility (RCF) provides rapid concessional financial assistance. with limited conditionality to low-income countries (LICs) facing an urgent balance of. payments need. The RCF was created under the Poverty Reduction and Growth Trust.
IMF approves $500m in debt relief for 25 countries amid COVID-19 challenges
Meanwhile, the IMF has also approved an amount of US$500 million in grant-based debt service relief to 25 countries to help them deal with the degrading impact of the COVID-19 on their economies.
According to the Managing Director of the funds, Ms Kristalina Georgieva in a statement on Monday, April 13, 2020, said the grant falls under the IMF’s Catastrophe Containment and Relief Trust.
Countries benefitting from the grant include Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, DR Congo, and The Gambia.
Others include Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo, and Yemen.