Ken Ofori-Atta
GHANA CAN now withdraw almost $1 billion in special drawing rights (SDRs) from the International Monetary Fund (IMF) to boost her economy following the challenges posed by the global pandemic.
This was made possible after the IMF board recently agreed that a general allocation of SDR 456.5 billion (equivalent to about $650 billion) should be implemented on August 23, 2021, to address the long-term global need for reserves, build confidence and support a sustainable and resilient global recovery.
According to the IMF, this package benefits all its member states, and helps emerging market and low-income countries, which are struggling to cope with the impact of the Covid-19 crisis. It is by far the largest to date and is a prime example of an international cooperative response to the Covid-19 pandemic.
Ghana will not have to reimburse the fund since the allocation is not a loan because it represents Ghana’s share of the $650 billion-worth in SDR reserve assets created by the fund and distributed to its members.
The fund also said the newly created SDRs will be credited to IMF member countries in proportion to their existing quotas in the fund.
According to the IMF, this move ensures that its members, including Ghana, have a strong external position to voluntarily channel part of their SDRs to scale up lending for low-income countries through the IMF’s Poverty Reduction and Growth Trust (PRGT).
The fund said once allocated, members can hold their SDRs as part of their foreign exchange reserves or sell, or use part or all of their SDR allocations. Members can exchange SDRs for freely usable currencies among themselves and with prescribed holders. Such exchange can take place under a voluntary arrangement or under a mandatory designation plan on members with sufficiently strong external positions, which serves as the ultimate backstop for the SDR market.
Meanwhile, a former Finance Minister, Seth Terkper, has cautioned the government not to breach the Public Financial Management Act by making sure the $1 billion dollar in special drawing rights (SDR) from the IMF goes through the Appropriation Act of Parliament, before it is spent.
That, he believes, will ensure proper accountability and efficient allocation of the country’s resources.
BY Samuel Boadi