IMF Confirms receipt of Ghana’s Request for Credit facility to Fight COVID-19

The International Monetary Fund (IMF) says it has received Ghana’s request for Rapid Credit Facility to help the country address the economic impact of the COVID-19 pandemic.

Finance Minister, Ken Ofori-Atta, last week, told parliamentarians in parliament that the government will consider getting funds from the Rapid Credit Facility created by the IMF and the World Bank to help low-income countries deal with the economic impact of the coronavirus.

As of March 24, 2020, Ghana has recorded 53 cases of COVID-19 with the death toll hitting two.

President Akuffo-Addo has suspended all public gatherings until further notice as part of measures to prevent the spread of the virus.

Schools have shut down and engaging in online learning, workers of some companies have been asked to work from their respective homes all in accordance with the directive from the president.

Business owners and some traders have started complaining about the adverse effect on the economy and their businesses due to the pandemic affecting the global market.

A release from the Director of the African Department at the IMF, Abebe Selassie, on Tuesday, March 23, 2020, revealed that the request from Ghana had been received by the Fund and it is pending consideration from the Executive Board.

“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.”

It can be recalled that the president has directed Finance Minister, Ken Ofori-Atta to make available $100 million for preparations and as a response plan to fight COVID-19 in the early stages of the infection in the country. This is what has led to Ghana requesting for the $100 million credit from the IMF.

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                                                      Finance Minister, Ken Ofori-Atta

The Rapid Credit Facility provides rapid concessional financial assistance with limited conditionality to low-income countries facing an urgent balance of payments need.

It was created under the Poverty Reduction and Growth Trust as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of low-income countries, including in times of crisis.

The facility places emphasis on the country’s poverty reduction and growth objectives, according to the IMF.

How accessible the facility is to countries is determined by taking into account the country’s case-by-case basis, the country’s balance of payment needs, the strength of its macroeconomics policies, the capacity to repay the fund, the amount of outstanding fund credit,  and the country’s record of past use of Fund credit.

How would the Government Generate Fund if IMF declines the Credit Facility Request?

The gruesome impact of the virus on many countries would create a burden on the IMF as many countries would turn to the Fund for a Credit facility. Hence, the institution will have to decide which countries it can attend to immediately and this may affect any nation that does not have funds to combat the menace.

This, therefore calls for the government to come up with an alternative action plan to address the dire situation.

The government would have to look forward to generating funds internally to fight the virus. Already, the Ghana Association of Bankers has donated 10 million Ghana cedi to fight the virus, Government can also appeal to other associations and some private institutions for donations.

In responding proactively, some individuals have suggested to the government to divert the $150 million it plans to give to the Electoral Commission for the new voter’s register to be channeled to fight the threat.

“(…), can you stop giving the EC our $150 million to conduct a ‘useless new registration’ and spend that money instead on saving lives? (…)” suggests Franklyn Cudjoe, President of IMANI Africa.