BoG: Central Bank’s balances with IMF hit GHS 11.8bn
The Central Bank as at the end of the 2021 fiscal year, had balances amounting to GHS 11.8bn with the International Monetary Fund (IMF).
At an exchange rate of GHS 7 to the dollar, that translates into some $1.69bn balances with the Bretton Wood Institution.
Per the Central Bank’s audited Financial Statement for the year ended 2021, its balances with the IMF increased from GHS 5.76bn at end 2020 to the current figure of GHS 11.8bn at end 2021.
On year-on-year basis, this marks a 100 percentage points increment in the apex bank’s balances with the IMF.
The BoG’s balances with the IMF, is in the form of Special Drawing Rights (SDR) allocations.
Special Drawing Rights (SDR) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund.
SDRs are units of account for the IMF, and not a currency per se. They represent a claim to currency held by IMF member countries for which they may be exchanged.
It is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves.
The SDR allocations can play a role in providing liquidity and supplementing member countries’ official reserves, as was the case with the 2009 allocations due to the global financial crises and is also the case with the Covid-19 pandemic.
BoG’s SDR holdings with IMF decline by Ghs 100 million in a month
The Bank of Ghana’s (BoG) Special Drawing Rights (SDR) holdings with the International Monetary Fund (IMF) as indicated in the Central Bank’s Statistical Bulletin for June 2021, declined by Ghs 100 million from Ghs 282 million ($49.21 million) in May 2021 to Ghs 182 million ($31.62 million) in June 2021.
Despite the recorded significant decline in its SDR holdings with the IMF, the Ghs 182 million SDR holdings was a huge improvement compared to the Ghs 7.18 million SDR debt owed the Fund in April 2021 when the Central Bank depleted its holdings with the Bretton Wood institution.
The Bank of Ghana’s (BoG) SDR holdings with the IMF as at the end of the first quarter of 2021 stood at Ghs 60.13 million ($10.3 million).
BoG uses $333m of IMF’s $1bn Covid-19 SDR funds to support gov’t’s budget
The Central Bank in September last year said it had come into an agreement with the central government to make available one-third ($333 million) of the $1 billion IMF Special Drawing Reserves (SDR) for Covid-19 related expenses to support the budget.
The remaining two-thirds of the interest free loan facility provided by the IMF, the Governor of the Bank of Ghana (BoG), Dr Ernest Addison noted at the 102nd Monetary Policy Committee (MPC) press briefing on Monday, September 27, was to be used to support the country’s balance of payments (BoP).
The use of the IMF SDR funds to support the budget was to help bridge the fiscal deficit which stood at 6.1 percent on a cash basis as at the end of July 2021.
IMF earns $14.5bn as interest on SDR allocations to member countries
The International Monetary Fund (IMF) at the end of the second quarter of this year made earnings of some $14.5 billion in interests on Special Drawing Rights (SDR) allocations made to member countries.
An examination of the Fund’s Quarterly Report on IMF Finances by norvanreports, indicated that a total of 204 billion SDR allocations were made by the end of June 2021 at the interest rate of 0.05 percent and exchange rate of $1.43.
The 204 billion allocation, the Bretton Wood institution notes includes some 182.6 billion SDR allocations made in 2009 amid the global financial crisis.
“As of July 2021, SDR 204.2 billion have been allocated, including SDR 182.6 billion allocated in 2009 in the wake of the global financial crisis,” said the IMF.
Aside the SDR allocations made, member countries holding of SDR at the end of the reporting month totaled 180.3 billion SDR with the prescribed SDR holdings by member countries being 2.3 billion SDR.
