The World Bank has sanctioned a $250 million International Development Association (IDA) credit to support Ghana’s Financial Stability Project.
Announced on Monday, this five-year initiative aligns with Ghana’s Financial Sector Strengthening Strategy (FSSS).
Aimed at enhancing financial stability, the project will assist in the recapitalization of viable banks and Specialized Deposit-taking Institutions (SDIs) impacted by Ghana’s Domestic Debt Exchange Program (DDEP).
The World Bank’s statement emphasised that this financial stability project is critical for maintaining the functioning of Ghana’s economy by providing essential services to households, businesses, and the government.
To mitigate the severe effects of the DDEP on financial institutions, the Ghanaian government established the Ghana Financial Sector Stability Fund (GFSF).
This fund offers solvency support to banks, pension funds, insurance companies, fund managers, and collective investment schemes.
The project will initially aid eligible undercapitalized yet viable banks and SDIs and will be available to other institutions needing support due to potential future losses, acting as a safeguard against unexpected financial setbacks.
Robert R. Taliercio, the World Bank Country Director for Ghana, Liberia, and Sierra Leone, stated, “This project will enhance Ghana’s financial stability by providing solvency support to banks and SDIs affected by the DDEP through the GFSF.
It will support the financial sector and the economy by ensuring depositors and other financial consumers have access to essential financial services provided by adequately capitalized banks and SDIs.”
