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Thursday, June 13, 2024

Federal government to use IMF financial loan to pay out for Covid-19 electrical power subsidy

Chairman of Parliament’s Finance Committee Dr Mark Assibey Yeboah has disclosed portion of a US$ 1 billion mortgage governing administration has secured from the IMF will be used to spend for the Covid-19 electricity subsidy for Ghanaians declared by President Akufo-Addo.

Parliament on Friday night time approved the US$1 billion (5.5 billion Ghana cedis) Worldwide Monetary Fund (IMF) Quick Credit Facility (RCF) to mitigate the impression of the Covid – 19 pandemic.

Dr. Assibey Yeboah who sent to the household a report of the Finance Committee of Parliament recommending acceptance of the mortgage, claimed 1 billion Ghana Cedis of the volume will be applied to pay out for the electrical energy subsidy.

President Akufo-Addo on 9th April 2020 declared the free of charge electricity and subsidy for some electricity individuals. Electricity Minister Peter Amewu advised a media briefing on Friday the help will expense 1 billion Ghana cedis.

“Out of the overall facility, roughly 1 billion Ghana Cedis will be employed to finance energy subsidy introduced by the president whilst the remained is utilized in direction of expenditure outlined in the 2020 funds.

In a memo to parliament, the Minister for Finance Ken Ofori Atta said the loan is portion of an total of US$50 billion the IMF is giving to aid tackle Coronavirus effects on low income international locations.

Ghana experienced initially sought to use for an amount of US$500 to US$600 million, but productively engaged the fund to enhance the ask for to US$1 billion.

The IMF executive board authorised the sum on 13th April and “the disbursement of the RCF proceeds to Ghana is predicted to acquire area in a single tranche on Friday, 17th April, 2020,” the report of the Finance Committee explained.

The Rapid Credit score Facility offers lower access, fast and concessional money guidance to Low Earnings Countries experiencing urgent stability payments require. In the circumstance of Ghana, given the great fiscal challenge posed by the Covid-19 pandemic, the RCF has been negotiated to be employed for spending plan guidance. The assistance will enable preserve critical expenditures, which include social defense programmes outlined in the 2020 finances.

The proceeds from the facility will also be used to assist shut the financing gap that has been developed by the Covid-19 pandemic by means of shortfalls in profits and additional expenditures in the struggle in opposition to the pandemic.

The loan carries a zero curiosity amount, has a grace time period of 5 and half yrs, and a last maturity of 10 a long time.

The Finance Committee’s report stated Ghana becomes the initial nation to acquire a 100% quota below the Covid-19 RCF from the IMF.

The report also stated the loan is a facility and does not imply Ghana is moving into a different IMF plan.

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