The Resident Representative of the IMF to Ghana, Dr Albert Touna Mama, has revealed that Ghana will today receive $1 billion from the International Monetary Fund (IMF). This is part of the IMF’s additional Special Drawing Rights (SDR) allocated to its 190 member countries. The Fund expects Ghana to use this money to support the country’s economic recovery efforts.
The IMF assessed the amount due each member based on the value of shares that it holds in the Fund. Currently, Ghana’s holdings in the fund is about SDR793 million. The SDR does not come with the usual conditionalities that normally accompany financial supports from the Bretton Woods institution.
Just like many countries, for Ghana, the money comes at a time when COVID-19 related expenditures have exacerbated the debt situation. Fiscal deficit has widened crippling investment in critical infrastructural projects in the country.
Meanwhile, Dr. Albert Touna Mama, said the “allocation is a ‘shot in the arm’” for the Ghanaian economy.
“This is a billion dollars in unconditional liquidity. It can be used to pay for health care, support the economic recovery or shore up the country’s foreign exchange reserves”.
Dr Albert Touna Mama
Uses of the SDR
Also, the Resident Representative of the Fund to Ghana indicated that the country has the liberty to decide what it will use the money for. Nevertheless, the only thing the Fund expects from Ghana is to ensure transparency in the usage of the funds.
“How SDRs are used is a sovereign decision and depends very much on Ghana’s priority areas and circumstances. Of course, the only expectation is that transparency and principles of good governance should be respected”.
Dr Albert Touna Mama
According to the IMF Resident Representative, the Fund, has since the beginning of the year, call for a comprehensive audit of COVID-19 expenditures.
Moreover, Dr Touna Mama reiterated that the $1 billion injection into the Ghanaian economy followed request by member countries and subsequent approval by the IMF Board of Governors. The countries, most of which are in Sub-Saharan Africa, called for an increase in the SDR to help make resources available in response to the ramifications of the COVID-19 pandemic.
The IMF increased the SDR to SDR456 billion, equivalent to $650 billion this month. This makes it the fourth of its kind and the largest in the fund’s 27-year history. The increment, according to Dr. Touna Mama, is befitting, given the unprecedented nature of the pandemic.
Distribution of the SDR
In a statement, Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) indicated that the official disbursement of the SDR starts today. According to her, this is “a unique opportunity to combat this unprecedented crisis”. She further detailed the distribution of funds based on the classification of the countries.
“SDRs are being distributed to countries in proportion to their quota shares in the IMF. This means about US$275 billion is going to emerging and developing countries, of which low-income countries will receive about US$21 billion – equivalent to as much as 6 percent of GDP in some cases”.
Ms. Kristalina Georgieva
Meanwhile, when received, it will bring to $2 billion, the total amount the fund has disbursed to the country since Ghana recorded its first case of the COVID-19 in March 2020.
In April last year, the IMF approved $1 billion for the country under its Rapid Credit Facility (RCF) program. The government used that amount to enhance the country’s response to the pandemic. Just like the current amount, the approval did not come with the usual IMF conditionalities.
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