The Executive Board of the International Monetary Fund (IMF) has implemented sweeping reforms to its surcharge and charges policy, significantly reducing the cost of borrowing for member states.
The changes, which will take effect on November 1, 2024, are expected to cut IMF borrowing costs by 36%, equivalent to approximately $1.2bn annually, according to Managing Director Kristalina Georgieva.
Speaking after the review, Ms Georgieva acknowledged the challenging global macroeconomic environment and the strain of elevated interest rates, noting that the reforms represent a consensus-driven effort to ease financial pressures on borrowers while maintaining the IMF’s lending capacity.
With the new reforms, Ghana which is a member country of the IMF, is expected to benefit from reduced cost of borrowing from the Fund. This is particularly important given that Ghana is currently under a $3bn Extended Credit Facility (ECF) programme with the IMF to help resolve the country’s balance of payment challenges.
Additionally, Ghana currently has a total liability of 2.275 billion Special Drawing Rights (SDR), equivalent to approximately $3.068 billion to the IMF, making Ghana the fourth among ten African countries with the most outstanding debt to the International Monetary Fund.
Under the revised policy, the number of countries subjected to surcharges—penalty fees levied on nations with large outstanding IMF loans—will fall from 20 to 13 by fiscal year 2026. The package includes measures to lower the margin over the SDR interest rate, raise the threshold for level-based surcharges, reduce time-based surcharges, and increase thresholds for commitment fees.
Despite the reduction in costs, Ms Georgieva emphasized the continued importance of surcharges to the IMF’s financial structure, describing them as critical to covering lending expenses and accumulating reserves against financial risks.
“This ensures that the IMF can provide essential balance of payments support on affordable terms when member countries need it most,” she said, adding that the reform strengthens the institution’s ability to serve in a fast-evolving global economy.
Source:norvanreports.com