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IMF increases interest rate on SDR to 2.99%; Ghana to pay more for Fund-backed loans

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Ghana and other countries seeking loan from the International Monetary Fund (IMF) will pay additional lending rate, as the Bretton Wood institution has increased the yield on its Special Drawing Rights (SDR) by some 210 basis points (2.1%).

This took effect on January 6, 2022.

Now, the rate of interest on SDR stands at 2.999%, from the previous 0.89%.

One US dollar is also equivalent to 0.753983.

The increase in the interest rate of the SDR indicates that member countries of the IMF will pay more for loans from the Fund.

Ghana is seeking an IMF-support programme to the tune of $3.0 billion that will span a period of about three years to revive its struggling economy.

This means the nation will pay an interest of 2.999% on the $3.0 billion over a period that will be determined by the terms and conditions of the Fund.

Already, the country is already seeking for debt cancellation via the G20 Common Framework programme, despite only poor nations eligible for it.

Reuters said Ghana had reached out to the Paris Club of creditor countries in December 2022 to ask for assurances that the Common Framework process, set up by the Group of 20 leading economies in 2020 in response to COVID-19, could be expedited.

The interest rate on the SDR, according to the Fund, is based on the sum of the multiplicative products in SDR terms of the currency amounts in the SDR valuation basket, the level of the interest rate on the financial instrument of each component currency in the basket, and the exchange rate of each currency against the SDR.

Ghana’s outstanding IMF loans slightly falls to $1.68bn

Ghana’s outstanding loans to the International Monetary Fund fell slightly to 1.28 billion Special Drawing Rights (SDR), equivalent to $1.68 billion as of the end of October 2022.

According to the Fund’s Quarterly Finances, the country is still ranked as number one in Africa with the largest outstanding debt to the Bretton Wood institution.

The outstanding debt represents 8% of the total number of African countries indebted to the Fund.

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