World Bank approves $250m credit facility for Ghana
In support of a five-year Ghana Financial Stability Project, the World Bank on Friday, May 31, authorized a $250 million International Development Association (IDA) credit.
By recapitalizing banks and specialized deposit-taking institutions (SDIs) affected by Ghana’s Domestic Debt Exchange Program (DDEP), the project would facilitate financial stability and promote the country’s Financial Sector Strengthening Strategy (FSSS).
As it supports economic growth and offers essential services to individuals, businesses, and the government, the financial system is essential to the operation of the Ghanaian economy. In response to the detrimental effects of the DDEP on financial institutions, the government created the Ghana Financial Sector Stability Fund (GFSF) to support banks, pension funds, insurance firms, fund managers, and collective investment schemes with their solvency.
“This project will contribute to Ghana’s financial stability, by providing solvency support to banks and SDIs impacted by the DDEP through the GFSF,” said Robert R. Taliercio, World Bank Country Director for Ghana, Liberia, and Sierra Leone.
“Through direct support to banks and SDI, the project will benefit Ghana’s financial sector and the economy by supporting the access of depositors and other financial consumers to savings, payments, and other core financial services provided by adequately capitalized banks and SDIs.“
The Ghana Financial Stability project is expected to immediately benefit eligible undercapitalized but viable banks and SDIs and become accessible to other banks and SDIs that may need support in the future due to potential new losses and provide a backstop against unexpected losses.
“The World Bank Group’s support aims to help address short-term shocks to improve prospects for long-term sustainable development and long-term resilience against future shocks. The project promotes financial stability, a key requirement to protect people and preserve jobs,” said Carlos Leonardo Vicente, Senior Financial Specialist and Team Lead.
