MPs Back IMF $1bn Loan Terms

PARLIAMENT has approved the terms and use of the $1 billion sourced from the International Monetary Fund (IMF) through the Rapid Credit Facility (RCF) to manage the economic impact of the coronavirus outbreak in the country.

The money, according to the Finance Minister, Ken Ofori- Atta, will be used for budget support and to address potential Balance of Payment (BOP) pressures caused by the pandemic.

Mr. Ofori-Atta said part of the money would be used to finance the electricity subsidy announced by the President, whilst the remainder would take care of the expenditure outlined in the 2020 budget because of the shortfalls in revenues and additional expenditures to fight COVID-19.

On March 16, 2020, Government requested financial support under the IMF Rapid Credit Facility as part of measures to mitigate the fiscal impact of the coronavirus.

The request followed the IMF’s announcement on March 4, 2020 of a US$50 billion support to help address the coronavirus impact with an allocation of $10 billion for low income countries through the Rapid Credit Facility (RCF) window.

The Finance Minister, in a memorandum submitted to Parliament, said in spite of Ghana’s original request for an RCF of 50% of Ghana’s quota (between US$500-600 million), the nation successfully engaged the Fund to increase the request to 100% of Ghana’s quota of SDR 738 million (about US$1 billion).

The economy of Ghana is expected to have a significant negative impact from COVID-19, and preliminary assessment indicates that using an average of crude oil price of $30 per barrel for 2020, expected petroleum revenue will record a shortfall of GH?5,660.35 million (US$993 million).

The impact of COVID-19 has been profound as it has caused significant disruptions to social and economic activities in the country and the world at large, with most economies predicted to experience some degree of depression for a foreseeable future.

As of April 17, 2020, Ghana had recorded 641 confirmed cases, eight deaths and about 83 patient recoveries

Loan Terms

Financing under the IMF Rapid Credit Facility carries a zero interest rate, has a grace period of 5 and half percent, with a final maturity of 10 years.

By Ernest Kofi Adu, Parliament House