The International Monetary Fund (IMF) has approved the disbursement of US$1 billion to Ghana to be drawn under the Rapid Credit Facility (RCF).
The money is to help Ghana address the “fiscal and balance of payments 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 remarked.
The Fund said it was still monitoring Ghana’s situation and is ready to provide policy advice and further support as needed.
Following the Executive Board’s decision, Mr. Zhang, Deputy Managing Director and Chair issued a statement, saying that;
“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 statement further indicated that “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 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.”