Ghanaian President Nana Addo Dankwa Akufo Addo, is seeking $100 million support from the International Monetary Fund (IMF) and the World Bank to combat the spread of coronavirus in Ghana.
The Ghanaian leader, who has been championing the slogan, “Ghana Beyond Aid’ has for long perceived the two institutions as “enemies” and pledged to take Ghana away from seeking foreign aids.
President Nana Addo had announced in 2018 that Ghana was set to exit its $1 billion bailout programme, which was contracted by his predecessor, John Dramani Mahama with the IMF by the end of that year.
This was followed by the announcement by Ghana’s Minister of Finance, Ken Ofori-Atta, during the 2019 budget presentation that Ghana would exit the bailout in the same year. “We are now on course to exit the IMF programme by the end of this year,” the Finance Minister said.
“We are grateful to the IMF and are determined to maintain a combination of economic discipline and vibrancy that will ensure that we will not have to be rescued in that manner in the future,” the minister said, adding that Ghana was on course to achieve the fiscal deficit target of 3.7% of GDP for the year, in a bid to convince investors of its commitment to uphold sound economic policies.
Therefore Ghana officially exited the IMF Extended Credit Facility (ECF) programme on April 2, 2019 and the euphoria that followed was unprecedented.
The Executive Board of the IMF completed the seventh and eight reviews under the Extended Credit Facility (ECF) support arrangement.
But coronavirus pandemic has compelled the Ghanaian president and his ruling New Patriotic Party (NPP) to activate all its contacts with the World Bank and the IMF for financial support to address the burden of the virus on the Ghanaian economy.
“We are currently in discussion with the World Bank to tap into a US$12 billion World Bank Group fast track COVID-19 facility to help close the financing gap. In addition, we are discussing with the IMF to access part of a US$10 billion facility, made available by the IMF to address coronavirus through the Rapid Credit Facility. We are also discussing with other multilateral and bilateral partners on potential assistance to close the financing gap,” Ofori-Atta told Parliamentarians on Wednesday in Accra.
According to him, events of the coronavirus are still unfolding, preliminary analysis conducted by the Ministry of Finance revealed that the virus will impact negatively on petroleum receipts due to the collapse of international crude oil prices, custom receipts, other receipts, expenditures and financing conditions on the fiscal front.
Additionally, the country’s tourism sector, travel and conferences, Foreign Direct Investment (FDI), international trade, food and nutrition, and poverty reduction strategies are all negatively being affected by the impact of the coronavirus, which the country has so far recorded seven cases involving people, who have travelled to affected regions of the world.
The minister said that it was based on the analysis that the Finance Ministry conducted that informed the country’s decision to seek funding support from the two Bretton Woods Institutions as part of measures to close the possible financing gap in the 2020 Budget.
He, however. told the Parliament that the measures may include withdrawal from the Stabilization Fund occasioned by anticipated shortfalls in the Annual Budget Funding Amount (ABFA).
According to the Finance Ministry, the emergency relief fund put in place by the World Bank, each member country is entitled to 0.1% of its GDP to deal with the coronavirus disease.
In view of that “Ghana has been allocated an amount of US$35 million”, and that the country has put in an application to access the fund and is waiting for the response.
“So far, the World Bank has not set out any conditionality that will be required for the country to meet before accessing the interest-free loan facility. If they set out any conditionality for us to meet, the ministry will come to Parliament and brief members accordingly,” he said
Ghana is expected to start repaying the interest-free loan facility in five years.
DAP/GIK/APA