Following the spread of Coronavirus around the globe, The International Monetary Fund (IMF) has approved a total of $ 19.354 billion for 32 African countries under its various lending facilities since late March, such as Rapid Financing Instrument (RFI), the corresponding Rapid Credit Facility (RCF) and Stand-By Arrangements (SBA)
RFI and RCF are used by the Fund to provide rapid assistance to low-income countries with urgent balance of payments need.
The top beneficiary of these loans in Africa is Egypt, with total of $7.972 billion approved in tranches of $2.772 billion on 11 May 2020 and $5.200 billion approved on 26 June 2020.
The second largest beneficiary is Nigeria with $3.4 billion approved on 28 April under the Rapid Financing Instrument (RFI) to “help Nigeria address the severe economic impact of the Covid-19 Pandemic.”
Others include Tunisia ($745 million), Ghana ($1 billion), Ethiopia ($411 million), Uganda ($491.5 million), Senegal ($442.1 million), Rwanda ($ 220.46 million), Cameroon ($226 million), Burkina Faso ($115.3 million), Gabon ($147 million), Côte d’Ivoire ($295.4 million), Mali ($200 million), Kenya ($739 million), Somalia ($395.5 million), Uganda ($491.5 million), Mozambique ($309 million), Madagascar ($165.99 million) among others.
At the back of Covid-19 crisis, IMF has approved loan assistance to 77 countries to the tune of $83.056 billion as at 22 July 2020. The fund said it has $1 trillion dollar lending capacity available to member countries.
Top beneficiaries among these 77 countries are Chile ($23.93 billion), Peru ($11.00 billion) and Colombia ($10.80 billion).
The $3.4 billion given to Nigeria was under the Rapid Financing Instrument (RFI), which provides rapid financial assistance, and it is available to all member countries facing an urgent balance of payments need.
According to IMF, financial assistance provided under the RFI is subject to the same financing terms as the Flexible Credit Line (FCL), the Precautionary and Liquidity Line (PLL) and Stand-By Arrangements (SBA), and should be repaid within 3¼ to 5 years.
Commitment fee . In accessing IMF resources on a precautionary basis, countries pay an annual commitment fee on the amount that can be drawn in that 12-month period. The commitment fee is refunded pro rata if they opt to draw on those resources during the relevant period.
The commitment fee increases with the level of access available over a twelve month period (15 basis points for committed amounts up to 115 percent of quota, 30 basis points on committed amounts between 115 percent and 575 percent of quota, and 60 basis points on amounts exceeding 575 percent of quota)
Lending rate . As with other drawing IMF arrangements, the lending rate comprises (1) the market determined Special Drawing Rights (SDR) interest rate and a margin (currently 100 basis points), together known as the basic rate of charge, and (2) surcharges, which depend on the amount and time that credit is outstanding. A surcharge of 200 basis points is paid on the amount of credit outstanding above 187.5 percent of quota.
If credit remains above 187.5 percent of the member’s quota. after three years, this surcharge rises to 300 basis points. If credit remains above 187.5 percent of quota after three years, this surcharge rises to 300 basis points. Together, level- and time-based surcharges are designed to discourage large and prolonged use of IMF resources.
Service charge . A service charge of 50 basis points is applied on each amount drawn.