IMF to offer zero interest rate up to 2011

The International Monetary Fund (IMF) has announced that low-income countries of the organization, which include Ghana, will enjoy zero interest rates for all concessional loans up to the end of 2011.

Sayeh indicated that the IMF’s Executive Board approved this during their last meeting in the third quarter of this year.

Antoinette Sayeh, the director of the Africa Department, IMF, announced this when she paid a one-day visit to Ghana.

The visit offered her the opportunity to interact with the government officials and stakeholders in the financial sector.

According to her, from 2011, IMF will offer permanent lower interest rates and also bring in a new set of lending instruments, which will streamline conditions and at the same time strengthen their support to Sub-Saharan Africa.

The new IMF concessional lending commitments to low-income countries through mid-July 2009 reached US$2.9 billion compared with US$1.5 billion for the whole of 2008.

The IMF new support package includes mobilization of additional resources, including the sales of an agreed amount of IMF gold, to boost the Fund’s concessional lending capacity up to US$8 billion in the first two years and further to US$17 billion through 2014.

This exceeds the call by the Group of 20 (G-20) for US$6 billion in new lending over two to three years.

Other packages also include doubling of average loan access limits, an Extended Credit Facility (ECF) to provide flexible medium-term support, a Standby Credit Facility (SCF) to address short-term and precautionary needs and a Rapid Credit Facility (RCF), offering emergency support with limited conditionality.

Sayeh commended the government for its effort for stabilizing the economy, stating that the growth rate of between 4.5% and 5% of the Ghana’s Gross Domestic Product (GDP) for the period of 2009/2010 is on the low side, but believed that it would improve economic development and poverty reduction.

She said that under the Balance of Payment (BoP) lending arrangement and also the Special Drawing Rights (SDR), IMF has supported the country with US$603 million, specifically for BoP to strengthen the cedi.

At the July meeting, IMF backed a proposal for a new general allocation of $250 billion of SDR into the global economy, of which more than $18 billion will help bolster the foreign exchange reserves and relax the financing constraints of low-income countries.

By Fred SARPONG