Ghana strong to pay back US$1bn COVID-19 loan – IMF

The International Monetary Fund (IMF) says Ghana’s track record of repaying debts will enable her to repay the US$1bn COVID-19 facility it lent the country with ease.

In a staff report and statement by the Executive Director for Ghana, the Fund said: “Ghana’s track record of servicing debts to the Fund, improvement in macroeconomic stability, and commitment to fiscal discipline over the medium-term suggest that repayment risks are contained.

“Including the proposed disbursement under the RCF, the total amount of outstanding credit from the Fund would amount to SDR 1.512 billion (205% of quota and 39.2 per cent of gross international reserves)”, the IMF explained.

“While repayments to the Fund are projected to rise over the medium-term, peaking at SDR 238.9 million in 2026, they would still remain at 1.1% of exports and 5.2% of foreign exchange reserves”, it added.

Debt

Meanwhile, the government’s debt to Gross Domestic Product ratio will rise from 63.2% of GDP at the end of 2019 to 68.7% of GDP at the end of 2020, driven by a wider fiscal deficit and lower GDP.

However, the medium-term debt path remains largely similar to the 2019 Article IV Daily Sustainability Analysis (DSA).

Continuing, the Bretton Wood institution said exceptional financing from the IMF and other multilateral institutions would not change Ghana’s risk of debt distress rating.

Liquidity indicators, particularly debt service to revenue ratios, follow a similar trajectory with a 15 percentage points increase in 2020 and slower normalisation over the medium-term, suggesting higher liquidity risk, it emphasised.

However, the outlook is subject to significant risks.

The Executive Board of the International Monetary Fund (IMF), on Monday, April 13, 2020, approved the disbursement of SDR 738 million (about US$1 billion) to be drawn under the Rapid Credit Facility (RCF) by the government of Ghana.

It said the fund will help address the urgent fiscal and balance of payments needs that Ghana is facing, improve confidence, and catalyse support from other development partners.