The IMF Board approved on April 13 the disbursement of SDR738 million or $1 billion in emergency aid for Ghana under the Rapid Credit Facility (RCF). Ghana will use the money to speed up its response plan against the COVID-19, including meeting an urgent budget and balance of payment needs.
IMF financing will catalyze funds from other development partners. It is the highest amount so far granted to a sub-Saharan African country to curb the virus. Senegal follows with $442 million. On the continent as a whole, Morocco received the highest financial support of $3 billion from the institution.
This situation has dampened Ghana’s ambition to stop receiving money from the IMF. President Nana Akufo-Addo had in 2018 said he and his government are “determined to put in place measures to ensure irreversibility and maintain macroeconomic stability so that we have no reason to seek the assistance of this powerful world organization again.”
As a reminder, the latest Extended Credit Facility (ECF) signed between the country and the IMF amounted to SDR664.20 million, or $925.9 million, down the amount now granted to fight the coronavirus.
The unforeseen pandemic is drastically impacting all economies around the world. While Ghana’s GDP growth was stable at 6.3% and 6.1% in 2018 and 2019, respectively, the IMF sees it at 1.5% this year due to the pandemic and the already weak economic environment.
Although authorities were quick to respond to the problem and to grant support to vulnerable households and businesses, significant public and external financing needs remain.
In addition to its recent support to Ghana, the IMF also stresses that additional support from other development partners will be necessary and essential to close the remaining external financing gap and ease fiscal constraints.
Source: Ecofin Agency