IMF reduces interest rate on Ghana’s loans
Bretton Wood Institution, the International Monetary Fund (IMF), has reduced interest rate charged on funds loaned to the Government of Ghana (GoG).
A check on the website of the multilateral lender, indicates that, a marginal reduction of 0.019% in its SDR interest rate has been made.
Hence, the current SDR interest rate charged on loans to Ghana, stands at 3.128% from the previous interest rate of 3.147%.
The 0.019% SDR interest rate reduction translates into a $570,000 interest payment reduction on the anticipated $3bn ECF loan from the IMF.
Given the reduction in interest payment, Ghana is now expected to pay total interest of $93.9m from the previous interest amount of $94.5m.
Ghana is currently seeking a three-year $3bn (SDR 2.25bn) ECF credit facility from the IMF, already Ghana is indebted to the Fund by some SDR 1.34bn ($1.01bn).
Special Drawing Rights (SDRs) can be described as an international reserve asset created by the IMF to supplement the official reserves of its member countries.
SDR allocations 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 amid the Covid-19 pandemic when the Fund made a historic allocation of 456 billion SDR ($650 billion).
The value of the SDR is based on a basket of five currencies—the Chinese renminbi, the Euro, the Japanese yen, the Pound sterling, and the U.S. dollar.
SDR allocation is a form of concessional loan provided by the IMF to member countries below market interest rate at 2.99 percent and long-dated loan repayment periods.
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