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25.03.2020 Business & Finance

Gov't Runs To IMF For Loan To Fight Coronavirus

Gov't Runs To IMF For Loan To Fight Coronavirus
LISTEN MAR 25, 2020

Ghana has turned to the International Monetary Fund (IMF) for financial support to combat the novel coronavirus pandemic.

The IMF in a press release disclosed that the government had requested a rapid credit facility disbursement.

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.

So far, President Nana Akufo-Addo has directed the Minister for Finance, Ken Ofori-Atta, to make available the cedi equivalent of $100 million to enhance Ghana's Coronavirus preparedness and response plan.

Before this directive, the total budget for preparedness with regard to the novel coronavirus stood at GHS35 million.

Support from Government was going towards the provision of Personal Protective Equipment (PPE), coordination activities and health declaration forms.

This amount, according to President Akufo-Addo, “is to fund the expansion of infrastructure, purchase of materials and equipment, and public education.”

There have, however, been calls for stimulus packages to cushion Ghanaians who may be affected by the measures put in place to curb the spread of the novel coronavirus, including a possible lockdown.

Rely on BoG reserves

The Minority in Parliament has urged the government to rely on reserves at the Central Bank to implement pro-poor measures to support individuals and firms that will be worst hit by the coronavirus pandemic.

The measures the Minority is proposing include rent subsidies and freezes, deferral of tax payments and a stimulus package for businesses.

“We expect the government to tap into the reserves. We have the stabilization fund and things like the Central Bank reserves that they have posted out there…In times like this, there is the need for the Central Bank to make available some reserves to make the government draw from it,” the Ranking Member on the Finance Committee of Parliament, Cassiel Ato Forson said.

About the Rapid Credit Facility

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

The Rapid Credit Facility 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.

Access to facility financing is determined on a case-by-case basis, taking into account the country's balance of payments need, the strength of its macroeconomic policies, capacity to repay the Fund, the amount of outstanding Fund credit, and the member's record of past use of Fund credit.

In addition, it also takes into account the size and likely persistence of the shock.