IMF bailout: Why countries are turning to the fund for loans during the economic crisis

• Many factors explain why countries turn to the Washington-based International Monetary Fund (IMF) for help
• However, it is often during an economic crisis that these nations turn to the Fund for urgent funding to stabilize their economy.
• YEN.com.gh examines some of the reasons why countries hire the Bretton Woods institution for an economic bailout

Several countries have turned to the International Monetary Fund (IMF) during a crisis for emergency financing to stabilize their struggling economy.

Like many countries with struggling economies, Ghana has engaged the Fund in the past for financial assistance.

In 2015, the Fund’s Board of Directors approved a $918 million loan in Ghana to support a reform agenda to accelerate growth and job creation while protecting social spending during the presidency of John Dramani Mahama.

Almost seven years later, the country is about to start talks with the IMF for economic support.

President Nana Addo Dankwa Akufo-Addo ordered Finance Minister Ken Ofori-Atta to begin formal engagements with the Fund, a move he previously refused despite the massive economic depression.

According to Gabby Otchere-Darko, a private lawyer and loyal member of the ruling New Patriotic Party (NPP), the government is not go to IMF because he lacks discipline but lacks confidence.

So why do countries turn to the IMF for help?

According to a video On the IMF’s official Facebook page, countries with struggling economies are turning to the Fund for emergency financing to stabilize their economies. Without such funding, the impact of the dire economic situation could be worse on citizens.

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Akufo-Addo’s decision to seek IMF assistance is welcome – John Mahama

Countries often come to the IMF when they don’t have a lending option because private investors and banks may not want to take the risk of donating money due to the struggling economy of the country.

What the IMF does

The IMF grants short-term loans at an interest rate well below the market rate. It also grants interest-free loans to the poorest countries.

IMF lending is fast and flexible, allowing countries to breathe by allowing them to meet their immediate financial needs. The respite allows new policies to have an impact.

Watch the video below:

Mahama hails Akufo-Addo’s decision to approach IMF for economic support

YEN.com.gh Earlier reported that former President John Dramani Mahama hailed President Nana Akufo-Addo’s decision to formally commit the International Monetary Fund (IMF) for financial support.

He said that although the decision was taken late, it is an important step towards solving the great economic gloom in the country.

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Kennedy Agyapong expresses sadness over government’s decision to seek IMF financial support

”I welcome President Akufo-Addo’s decision to formally engage the IMF to enter into a program under the Fund.

Source: YEN.com.gh