In a bid to bolster economic recovery and resilience, Dr. Ernest Addison, Governor of the Bank of Ghana (BoG), has appealed to the International Monetary Fund (IMF) to continue offering zero interest rate loans to Ghana and other low-income countries (LICs).
Through its Poverty Reduction and Growth Trust (PRGT), the IMF provides concessional financing at zero interest rates to LICs. Dr. Addison emphasized the importance of maintaining this concessional financing during the upcoming comprehensive review of LICs facilities.
Speaking at the 2024 African Consultative Group (ACG) meeting with Ms. Kristalina Georgieva, Managing Director of the IMF, Dr. Addison highlighted the need to address erosion caused by global inflationary pressures. He stressed that keeping concessional financing intact would complement monetary policies and help mitigate inflationary pressures while supporting economic recovery in low-income countries.
The discussion at the IMF/World Bank Group Spring Meetings in Washington, US, centered on ways to enhance Africa’s financing amidst overlapping crises and beyond. Dr. Addison called for replenishing the Catastrophe Containment and Relief (CCRT) resources envelope to provide grant support to vulnerable members facing shocks.
Additionally, he reiterated the importance of further enhancing the G20 Common Framework and leveraging the Global Sovereign Debt Roundtable (GSDR) to facilitate transparent and equitable resolution of debt, including debt cancellation for the most vulnerable members.
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While acknowledging the welcome review of the Fund’s internal debt policies, Dr. Addison emphasized the need for impactful changes to achieve their intended purpose. He urged stronger coordination between the IMF’s LICs facilities review and the World Bank’s IDA21 replenishment efforts to provide holistic support to LICs.
In addressing the challenges faced by African governments, Dr. Addison encouraged increased domestic financing to complement monetary policy measures amid ongoing economic recovery efforts. He emphasized that domestic adjustment policy efforts, without adequate financing, would yield limited results given the complex domestic and external environment.
The post-pandemic recovery in African countries has been subdued, marked by elevated debt distress and income divergences. Dr. Addison emphasized the importance of comprehensive measures to achieve sustainable and inclusive growth, underscoring the critical role of financing in overcoming these challenges.
In conclusion, Dr. Addison’s appeal to the IMF reflects Ghana’s commitment to promoting economic stability and resilience in low-income countries. By maintaining zero interest rate loans and enhancing financing mechanisms, countries can better address the complex challenges they face and work towards sustainable development and inclusive growth.
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