Ghana has received its share of US$1 billion equivalent of the International Monetary Fund’s (IMF) new Special Drawing Rights (SDRs) allocation to boost the post-COVID economic recovery of member countries.
Earlier this month, the IMF Board of Governors approved a general allocation of SDR456.5 billion, equivalent to US$650 billion out of which about US$33.7 billion was designated for African countries. The SDR allocation was to boost global liquidity and economic recovery following the devastating impact of the Covid-19 pandemic on lives and livelihoods.
The new SDR allocation which became effective on 23rd August, 2021 is to augment the additional financing needs of countries, especially low-income countries, caused by the impact of the pandemic on public finances.
Furthermore, the African Development Bank (AfDB) estimates that African governments require additional financing of about US$484.6 billion within the next three years. This is so that countries in the region will be able to close the financing gap and to emerge from the COVID-19 crisis stronger and more resilient.
According to the IMF, the SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy.
This historic SDR allocation will particularly help countries that are most vulnerable to immediately address the impact of the pandemic towards economic recovery, a statement released by the Finance Ministry indicated.
African Ministers of Finance work together for this course
Notably, the SDR allocation is in response to a global call to action. This became necessary following the devastating effects of the pandemic. It was also fuelled by the joint effort of African Finance Ministers and championed by Ken Ofori-Atta, the African Union and UNECA. Also, the initiative was supported by key international partners including the IMF, the World Bank, the G20 and the European Union.
The Special Drawing Right (SDR) is an interest-bearing international reserve asset created by the IMF in 1969 to supplement member countries’ official reserves. The general allocations of SDRs are distributed across the IMF membership in proportion to their IMF quota.
Commenting on the news of the SDR allocation becoming effective, Ken Ofori-Atta, Minister for Finance indicated that:
“The Government of Ghana expresses its gratitude to the IMF for this historic advocacy and SDR allocation. It provides additional policy space to support Ghana’s efforts to counter the impact of the COVID-19 pandemic on lives and livelihoods. It will support the GHS100 billion Ghana Cares (Obaatanpa) post-pandemic recovery program.”
Ken Ofori-Atta, Minister of Finance
The Ministry of Finance will ensure that all statutory requirements are complied with in the use of the Special Drawing Rights, the statement highlights.
Meanwhile, former Minister of Finance, Seth Terkper has called on the government to act within the remits of the law by taking the US$1 billion through parliament for approval on how it should be spent. The former Minister indicated, that will ensure proper accountability.
Accordingly, he stressed that the constitution and the Public Financial Management Act (PFMA) requires government to channel the earmarked expenditure of the fund through parliament for appropriation before it can be used as budgetary support.
