The Bank of Ghana Headquaters
• Government has been admonished to expend a recent SDR allocation to key areas
• One of the areas is to prop the countries reserves along with fiscal interventions
• Courage Martey believes the funds must be deployed critically
An economist with Databank Ghana, Courage Martey has urged for the recently disbursed Special Drawing Right allocation to be expended wisely in critical areas.
His calls come on the back of the International Monetary transferring a little over US$1 billion into the central bank’s account as part of a Special Drawing Right (SDR) allocation to support economic recovery.
Reacting to the development Courage Martey underscored the need for government to use the funds to prop up its reserves along with prudent fiscal interventions.
“Countries are not restricted in how they can use the SDRs. But it is important to look at how they can use it to prop up the reserves. I believe at a time like this, there is the need to think of which areas are the best to deploy these funds. Fiscal intervention is important, but the Bank of Ghana is at a time when it might need some additional buffer given the pressure the Cedi is under at the moment,” Martey is quoted to have told Citi Business News.
“As a result of the pandemic, global public debt has gone up and breaching sustainability thresholds, especially in the developing world. But governments cannot continue to borrow to intervene to minimize the shocks of the pandemic, hence, the use of the SDR program of the IMF to support member countries. The money is free money to member countries and helps them intervene without concerns around the impact of debt and debt sustainability,” he continued.
According to Ghana’s Finance Minister, Ken Ofori-Atta, Government will withdraw the entire US$1 billion made available to support key areas of the economy in a bid to fast-track growth.
He adds that government is also considering directing some of the funds towards its ambitious Ghana CARES programme.
The SDR allocation was first introduced for all countries as part of emergency response programme to the global recession following the Great Depression era.
The IMF allows for countries to access emergency financing disbursement under the Rapid Credit Facility.
The recent disbursement for Ghana was approved by the Fund 18 months ago as part of measures in fighting the Coronavirus pandemic.