The Executive Board of the International Monetary Fund (IMF) on Monday, April 14, 2020, approved some $1 billion under its Rapid Credit Facility (RCF) for Ghana to reportedly fight the dreaded Covid-19 coronavirus with.
This huge credit facility sourced by the Akufo Addo administration of the New Patriotic Party (NPP) is slightly more than a similar facility secured from the IMF by the then governing National Democratic Congress (NDC) to which the NPP berated the NDC intensely for saddling Ghana with the draconian conditionality’s often attached to such IMF credits.
The NPP then promised to exit all IMF programmes and rely on internal policies to generate much-needed funds. The Akufo Addo government in April 2019. However, the US$ 1 billion credit facility amounts to a direct U-Turn on the government’s resolve.
The disbursement is expected to help Ghana balance its revenue shortfalls at the pandemic Covid-19 cripples the global economy, squeezing out most sources of revenue for the Ghanaians government.
“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,” stated the Managing Director and Chair of the IMF Executive Board, Tao Zhang.
“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.”
Finance Minister, Ken Ofori-Atta, has said Ghana is expected to suffer a revenue shortfall of up to GH¢2.2 billion (about $377 million) as a result of the coronavirus pandemic.
The credit facility was approved in record time-barely one month after the government of Ghana applied for its.
According to Economics Professor John Gatsi, this was possible because the facility is classified by the IMF RCF. “This rapid disbursement does not happen because of extraordinary efforts by countries accessing the facility but the exigencies of the times,” he said.
There are suspicions that the Akufo Addo administration may blow the money on election expenditure, given the fact that the country may be flung into a crucial election if the Covid-19 crisis is able to be contained.
“This is why judicious application of all the funds being generated from the World Bank, IMF, the Stabilization Fund and the COVID-19 Trust Fund is required with greater transparency and accountability. We must apply the funds to avoid delay in resuming normal economic activities. We must avoid food crisis in post Coronavirus era,” warns Professor Gatsi.
According to him, it the amount is not used judiciously, the government will throw Ghana into a deep economic recession that may be difficult to surmount. “While the expectation for recession is a possibility for fragile economies in Sub-Saharan Africa, if the Coronavirus pandemic is contained early enough, Ghana may not slip into a recession but will experience a sharp reduction in economic growth from 6.1% in 2019 to 1.5% in 2020,” he said in a statement copied to Whatsup News.