Senegal gets $442m too
The International Monetary Fund (IMF) has given a boost to two African countries to prop their hands in their response to coronavirus economic crisis.
The approved the released of $1 billion to Ghana and $442 million to Senegal.
The $1 billion would be drawn under the Rapid Credit Facility, while in Senegal’s facility $294.7 million is coming under the Rapid Financing Instrument (RFI), and the balance of $147.4 million is under the Rapid Credit Facility (RCF).
The Breton Wood institution believes that the disbursement will help address the urgent fiscal and balance of payments needs that Ghana is facing, improve confidence, and catalyze support from other development partners.
IMF Deputy Managing Director and Board Chair, Mr. Tao Zhang, said, “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,” he said.
Zhang said Ghana’s response to the coronavirus has been “timely, targeted, and proactive, focused on increasing health and social spending to support affected households and firms.”
“The Central Bank has recently taken steps to ensure adequate liquidity, preserve financial stability, and mitigate the economic impact of the pandemic, while allowing for exchange rate flexibility to preserve external buffers.
“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.
“Additional support from other development partners will be required and critical to close the remaining external financing gap and ease budget constraints,” he added.
national Monetary Fund (IMF) on Monday approved the disbursement of $442 million to Senegal to respond to the novel coronavirus economic crisis.
Similarly, the IMF said the disbursement to Senegal is “to help Senegal meet the urgent balance of payment needs stemming from the COVID-19 pandemic.”
IMF said the COVID-19 pandemic was hitting Senegal hard, and the sharp global economic downturn and domestic containment measures have led to a substantial reduction in economic activity, with sectors such as tourism, transport, construction, and retail particularly hard-hit, and the pandemic in Europe is also translating into lower remittances.
As a result, the short-term economic outlook has deteriorated significantly, with large uncertainties surrounding the duration and spread of the pandemic.
Mr. Mitsuhiro Furusawa, IMF Deputy Managing Director and Acting Chair, said the COVID-19 Pandemic was having “a severe impact on Senegal, creating an urgent balance-of-payments and fiscal financing need.”
“To mitigate the impact of the pandemic, the authorities have acted fast by increasing health spending and providing targeted support to vulnerable households and firms, including through food aid, suspension of utility bill payments for the poorest, and targeted tax relief.
“The IMF’s emergency financing under the Rapid Credit Facility and the Rapid Financing Instrument will provide much-needed liquidity to support the authorities’ response to the crisis and could catalyze further assistance from the international community, preferably in the form of grants,” Furusawa added.
He said a temporary widening of the budget deficit in Senegal was appropriate to mitigate the health and economic impact of the pandemic.
“It is also advisable that macroeconomic policies continue to be guided by the objectives of the current Policy Coordination Instrument (PCI) to the extent possible. Once the crisis abates, a gradual return to the budget deficit target of 3 percent of GDP, in line with regional fiscal rules, is necessary to preserve external and debt sustainability.
“Additional concessional donor support will be critical to close the remaining financing gap, ease the adjustment burden, and preserve Senegal’s impressive economic achievements. Ensuring that disbursed funds are used in a well-targeted, cost-effective and transparent manner remains imperative.”
