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IMF Board approves $1b COVID-19 loan for Ghana as GDP projected to fall to 1.5%

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As the COVID-19 pandemic severely impacts Ghana’s economy, among others, slowing growth to projected 1.5 per cent, and putting the exchange rate under pressure, the Executive Board of the International Monetary Fund (IMF) has on April 13, 2020 approved a $1 billion loan for the country under the Fund’s Rapid Credit Facility.

According to the Fund, the loan will help address the urgent fiscal and balance of payments needs that Ghana is facing, improve confidence, and catalyze support from other development partners.

Since announcing the first two confirmed cases of the disease on March 12, cases in Ghana have gone up to 566 as at April 13, with 8 deaths and four recoveries.

The global numbers have gone above 1.9 million as at 06:15GMT Tuesday April 14, 2020 with nearly 120,000 deaths and more than 453,000 recovered.

Ghana’s GDP at constant prices was estimated to be 6.1 per cent in 2019, but now projected to decline to 1.5 per cent in 2020.

“The COVID-19 pandemic is impacting Ghana severely. Growth is projected to slow down, financial conditions have tightened, and the exchange rate is under pressure. The budget deficit is projected to widen this year given expected lower government revenues and higher spending needs related to the pandemic. The Fund’s emergency financial assistance under the Rapid Credit Facility will help address the country’s urgent financing needs, improve confidence, and catalyze support from other international partners.

“The uncertain dynamics of the pandemic creates significant risks to the macroeconomic outlook. Ghana continues to be classified at high risk of debt distress. The authorities remain committed to policies consistent with strong growth, rapid poverty reduction, and macroeconomic stability over the medium-term,” Mr. Zhang, Deputy Managing Director and Chair, was quoted as saying.

The Ghana government has initiated mitigating programmes to cushion the effect on citizens.

In another development, the IMF has granted debt relief to 25 countries as part of the Fund’s response to help fight the COVID-19 pandemic.

The countries that will receive debt service relief are: Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, D.R., The Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo and Yemen.

The IMF in March announced it is making available about $50 billion through its rapid-disbursing emergency financing facilities for low income and emerging market countries that could potentially seek support.

“Of this, $10 billion is available at zero interest for the poorest members through the Rapid Credit Facility,” it added.

By Emmanuel K. Dogbevi

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