The African Centre for Energy Policy (ACEP) has criticized the Ghanaian government for its handling of the $1 billion Special Drawing Rights (SDRs) allocated by the International Monetary Fund (IMF) in 2021. According to ACEP’s findings, the government failed to meet some of the IMF’s guidance requirements regarding the utilization of these funds to boost macroeconomic recovery.
Ghana received the equivalent of $1 billion from the IMF as its share of a new SDR allocation designed to assist member countries’ post-COVID economic recovery. The IMF Board of Governors approved an allocation of SDR456.5 billion (approximately $650 billion), with about $33.7 billion set aside for African countries. The allocation, effective from August 23, 2021, aimed to boost global liquidity and support economic recovery following the COVID-19 pandemic, particularly in low-income countries.
ACEP’s analysis of Ghana’s use of its SDR 707.3 million allocation found that Ghana was progressing toward macroeconomic stability before the SDR approval. The SDR allocation was expected to reinforce the country’s economic recovery path. However, ACEP’s report indicates that the allocation failed to augment macroeconomic stability, with the situation deteriorating in 2022 despite the fiscal space created by the SDRs.
On the sidelines of a media engagement with the Parliamentary Press Corps, Maybel Acquaye, Head of Monitoring & Evaluation who also doubles as the Senior Policy Analyst at ACEP, noted that the government applied the SDRs to budgetary financing without establishing the recommended debt management structure.
“…..recommendations in the IMF guidance note should be accompanied with specific mandatory requirements that augment countries’ options in their SDR application,” she noted.
Recommendations such as debt sustainability management and budgetary financing should have fiscal frameworks and debt management programs as mandatory accompanying requirements at the time, ensuring that countries adhere to these essential elements to fulfill the fund’s objectives effectively.
“The guidance note also recommends that if you choose the option of a debt sustainability measure, in terms of application of SDR you should be swift in coming up with a debt management structure, but you realize that even though we started applying the SDR in December 2021, nothing of that sort was issued by the government, we just went ahead to apply the SDR in budgetary financing without the accompanying structures that could have augmented that effort to achieve the expected macroeconomic sustainability.”
ACEP’s analysis also highlighted that the lack of a fiscal framework contributed to the misuse of the SDRs. The report recommended that the IMF guidance notes include specific requirements such as fiscal frameworks and debt management programs to ensure that countries adhere to the objectives of the SDR allocations.
Additionally, ACEP called on the IMF to enhance visibility in the allocation and utilization of SDRs to ensure effective monitoring and accountability. The organization suggested that civil society organizations, the media, and the public should have access to information on how countries are using these funds. Parliamentary scrutiny should also be encouraged to ensure proper governance and accountability even though, the SDRs aren’t spent in isolation but generally as a support to the national budget.
