The International Monetary Fund (IMF), has approved a disbursement of US$1 billion to Ghana to help address the urgent fiscal and balance of payments needs that Ghana is facing in the wake of the novel Coronavirus pandemic.
The money, which is to be drawn under the Rapid Credit Facility (RCF), is also to help the country “improve confidence, and catalyze support from other development partners,” Deputy Managing Director and Chair of the IMF Executive Board, Mr. Zhang, issued in a statement on April 13th, 2020.
“The COVID-19 pandemic is impacting Ghana severely. Growth is projected to slow down, financial conditions have tightened, and the exchange rate is under pressure. 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 statement noted.
He further noted that though government’s response has been timely, Ghana continues to be classified at high risk of debt distress.
“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,” he added.
The International Monitory Fund, however, assures Ghana of further support.
“The IMF continues to monitor Ghana’s situation and stands ready to provide policy advice and further support as needed,” it said.
The COVID-19 pandemic is already impacting Ghana severely. Business are hard hit. Currently, the country has recorded 566 cases and 8 deaths. However, Government has put in place various measures to contain the spread of the COVID-19 pandemic and support affected households and businesses.
The IMF officially acknowledged receipt of Ghana’s request for support on March 24, 2020, when the country had recorded 53 cases and two deaths.
COVID-19 fight: Gov’t to spend GHS 1.2bn from Contingency Fund
This comes barely a week after the Finance Committee of Parliament gave authorization to the Minister of Finance to spend GHS1.2 billion from the Contingency Fund.
The Finance Minister has already indicated that the cumulative effect of the novel coronavirus pandemic will cost Ghana GHS9.505 billion.
The government in partnership with the National Board for Small Scale Industries, Business & Trade Associations and selected Commercial and Rural Banks has put in place a GHS 600 million soft loan scheme with a two-year repayment plan for micro, small and medium scale businesses.
Persons who access these loans will have a one-year grace period before beginning repayment.
Apart from the above which will come from the GHS1.2 billion cedis, Mr. Ofori-Atta is seeking the support of Parliament to amend the relevant laws to lower the cap of the Stabilization Fund from US$300 million to US$100 million. This is to enable the government use the excess funds to bridge the gap created by the economic impact of the pandemic.
Already government has announced several social intervention measures to offer some relief to citizens in the wake of the pandemic.
IMF approves $500m in debt relief for 25 countries amid COVID-19 challenges
Meanwhile, the International Monetary Fund has also approved an amount of US$500 million in grant-based debt service relief to 25 countries to help them deal with the negative impact of the COVID-19 on their various economies.
The fund’s Managing Director, Ms. Kristalina Georgieva in a statement on Monday said the grant falls under the IMF’s Catastrophe Containment and Relief Trust.
Countries that will benefit from the grant include “Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, DR Congo, and The Gambia.
The others are Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo, and Yemen.