A $250 million International Development Association (IDA) credit for a five-year Ghana Financial Stability Project was granted by the World Bank on Friday, May 31, 2024.
By promoting financial stability through the recapitalization of banks and specialised deposit-taking institutions (SDIs) affected by Ghana’s Domestic Debt Exchange Programme (DDEP), the initiative would support the country’s Financial Sector Strengthening Strategy (FSSS).
The financial system is essential to the operation of the Ghanaian economy since it fosters economic growth and offers vital services to individuals, businesses, and the government.
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The government created the Ghana Financial Sector Stability Fund (GFSF) to support banks, pension funds, insurance companies, fund managers, and collective investment schemes with their solvency in order to alleviate the harsh effects of the DDEP on financial institutions.
By offering solvency support to banks and SDIs affected by the DDEP through the GFSF, this project will contribute to Ghana’s financial stability,” stated Robert R. Taliercio, Country Director for the World Bank in Ghana, Liberia, and Sierra Leone.
The project will benefit Ghana’s financial sector and economy through direct support to banks and SDI, by facilitating depositors’ and other financial consumers’ access to savings, payments, and other core financial services offered by adequately capitalised banks and SDIs.
It is anticipated that the Ghana Financial Stability initiative will benefit qualifying undercapitalized but viable banks and SDIs right now.
It will also open up access to other banks and SDIs that might require assistance in the future owing to possible fresh losses and act as a safety net against unforeseen losses.
In order to increase the likelihood of long-term sustainable development and long-term resilience against shocks in the future, the World Bank Group is providing support.
Carlos Leonardo Vicente, Senior Financial Specialist and Team Lead, stated that the project “promotes financial stability, a key requirement to protect people and preserve jobs.
The project is a supplement to the IMF-Extended Credit Facility and the World Bank’s Development Programme Financing series, which support reforms to enhance the macroeconomic environment and allow financial institutions to function profitably and produce internal capital.
Additionally, it supports other World Bank-funded initiatives in Ghana that aim to revive the country’s economy and create jobs, like the Ghana Development Financing Project, which helped establish the Development Bank of Ghana and offers small and medium-sized businesses and small corporations long-term financing.
