Coronavirus: Spend IMF’s $1 Billion Loan Diligently – Mahama Warns Akufo-Addo Government

Former President John Dramani Mahama has warned the Akufo-Addo led government to be diligent in spending the US$1 billion loan facility approved by the International Monetary Fund, IMF, to Ghana under the Rapid Credit Facility, RCF.

John Mahama said this during a Facebook stream to announce his donation of food items to 20,000 households in the country.

The NDC flagbearer also said the IMF’s facility is timely and urged the government to be prudent in expending the loan.

“The fast track approval by the IMF of the highly concessional Rapid Credit Facility is therefore timely and very welcome. This will help cushion the economy from the dangers of recession. Our economy has revealed from this COVID-19 stress test that it is still fragile and we need to be prudent in how we manage going forward. We must also be diligent in how we apply the US$1 billion facility as the various tranches are released.”

The Executive Board of IMF on Monday, April 13, 2020, announced the approval of the loan.

The money is to assist Ghana address the “fiscal and balance of payments needs” and also aid the country to improve confidence in its economy especially in the wake of the COVID-19 pandemic.

“The COVID-19 pandemic is already impacting Ghana severely. Growth is slowing down, financial conditions have tightened, and the exchange rate is under pressure. This has resulted in large government and external financing needs. The authorities have timely and proactively responded to contain the spread of the COVID-19 pandemic in Ghana and support affected households and firms,” the IMF noted in a statement.

The IMF also added that it was still monitoring Ghana’s situation and is ready to provide policy advice and further support as needed.

What are the conditions for the loan?

According to the finance minister, Ken Ofori Atta “It is a zero percent facility, 10 years and five and half moratorium and does not come with any conditionalities”.

The Minister said that this would give government some space to plan to help stabilize the economy.

He also praised the timeliness of the IMF Board to their request which was formally presented to the Fund on Monday, March 16, 2020.

Government to access IMF fund this week

The Minister of Finance, in an interview on Tuesday, April 14, 2020, says the country should be able to start drawing down the $1 billion IMF rapid credit facility this week.

According to the Finance Minister, the Bank of Ghana should commence the process this week for the funds to hit the Central Banks account by this weekend.