IMF approves US$1 billion disbursement to Ghana to fight COVID-19 pandemic

The International Monetary Fund (IMF), has approved a disbursement of US$1 billion to Ghana drawn under the Rapid Credit Facility (RCF).

Ghana's Finance Minister, Ken Ofori-Attta

This is to help the country address the urgent fiscal and balance of payments needs that Ghana is facing due to the COVID-19 pandemic.

In a statement, Deputy Managing Director and Chair of the IMF Executive Board, Mr Zhang said it is also to “improve confidence, and catalyze support from other development partners.”

“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 added that even though the government’s response has been timely, Ghana is still 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 IMF, however, assured 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 novel Coronavirus is already having a harsh effect on Ghana. Businesses are hard hit.

Ghana has currently recorded 566 cases and 8 deaths. However, the government has put in place 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.

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