Parliament of Ghana has approved a US$1 billion IMF Rapid Credit Facility to alleviate the impact of the COVID-19 pandemic on the economy.
The Executive Board of IMF announced the approval of the loan on Monday, April 13, 2020, coming at a zero per cent interest with 5 and half years moratorium expected to be paid within ten years.
From the total amount, one billion Ghana cedis (GHS1 billion) will be used to finance the electricity relief package for Ghanaians for the next three months.
The rest of the facility will go into financing the 2020 budget which has been thrown largely out of gear due to reeling effects of the coronavirus pandemic.
The Finance Minister, Ken Ofori-Atta speaking during the debate on the facility, said the government will explore the possibility of sourcing external financing to deal with the problems created by the pandemic.
“Mr Speaker, in February we were about to raise three billion dollars from the international markets before the market closed. In the same way, this government moved very quickly when we saw the trend in the world to get this facility approved by the IMF. Across the region our country has enough physical space to confront this crisis alone, the efforts of African countries need to be backed with additional financial systems for an effective policy response for COVID-19.”
“So this government will continue to look for resources to bridge the gap. These are extraordinary times and we must take extraordinary measures to ensure that we protect our people. When we look at the resources that Africans have and the resources that we have seen in the west clearly we will not be able to put our people in this recession time without taking some very serious measures,” the Minister said.
What role will IMF’s $1 billion loan play?
The money is to help Ghana address the “fiscal and balance of payment needs” and also help the country to improve confidence in its economy especially in the wake of the COVID-19 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 noted in a statement.
The IMF in the statement said it was still monitoring Ghana’s situation and is ready to provide policy advice and further support as and when it comes necessary.