$250M To Support Ghana’s Financial Sector-World Bank

World Bank Pledges $250M to Support Ghana’s Financial Sector Stability

The World Bank, in  a statement taken a bold step to support Ghana’s financial stability by pledging $250M to help the country’s financial sector.

The five-year project, approved on May 30, 2024, aims to address the impact of Ghana’s Domestic Debt Exchange Programme (DDEP) on banks and financial institutions.

The project aligns with Ghana’s Financial Sector Strengthening Strategy (FSSS) and seeks to strengthen financial stability by providing solvency support to banks and Specialized Deposit-taking Institutions (SDIs) affected by the DDEP.

This initiative will ensure continued access to essential financial services for Ghanaians, protecting their livelihoods and preserving jobs.

The funds will be channeled through the Ghana Financial Sector Stability Fund (GFSF), established by the government to support struggling institutions.

The project prioritizes immediate assistance to eligible undercapitalized banks and financial institutions, with provisions for future support if needed.

According to Robert R. Taliercio, World Bank Country Director for Ghana, Liberia, and Sierra Leone, “The financial system is critical to the functioning of the Ghanaian economy, providing critical services to households, firms, government, and supporting economic growth.”

He added that the project will contribute to Ghana’s financial stability by providing solvency support to banks and SDIs impacted by the DDEP.

Carlos Leonardo Vicente, Senior Financial Specialist and Team Lead for the project, emphasized that “The World Bank’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.”

This initiative complements other World Bank programs in Ghana, including the Development Policy Financing series and the IMF’s Extended Credit Facility.

These programs focus on broader economic reforms and enabling financial institutions to operate profitably.

The World Bank’s International Development Association (IDA) has a long history of assisting low-income countries, with a focus on Africa.

Since its inception in 1960, IDA has provided financial assistance to 114 countries, with a total commitment of $458 billion.

World Bank Statement:

World Bank Supports Ghana to Strengthen its Financial Sector

WASHINGTON, May 30th, 2024 – The World Bank today approved a $250 million International Development Association (IDA)* credit for a five-year Ghana Financial Stability Project.

The $250M project will support Ghana’s Financial Sector Strengthening Strategy (FSSS) by contributing to financial stability through the recapitalization of viable Banks and Specialized Deposit-taking Institutions (SDIs) impacted by Ghana’s Domestic Debt Exchange Program (DDEP).

The financial system is critical to the functioning of the Ghanaian economy, providing critical services to households, firms, government, and supporting economic growth.

To address the severe impact of the DDEP on financial institutions, the Government established the Ghana Financial Sector Stability Fund (GFSF) to provide solvency support to banks, pension funds, insurance companies fund managers and collective investment schemes.

Also read; Stabilise the cedi with gold : Bawumia promises if elected

“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 SDIs, 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 providing 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.

The project complements the World Bank’s Development Program Financing series and the IMF-Extended Credit Facility, which support reforms to improve the macroeconomic environment and enable financial institutions to operate profitably and generate internal capital.

It also complements other World Bank funded projects aimed at economic recovery and job creation in Ghana, such as the Ghana Development Financing Project which supported the establishment of the Development Bank of Ghana and provides long-term financing to small and medium enterprises and small corporates.

*The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low-to-zero-interest credits for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives.

IDA is one of the largest sources of assistance for the world’s 74 poorest countries, 39 of which are in Africa.

Resources from IDA bring positive change to the 1.3 billion people who live in IDA countries. Since 1960, IDA has provided $458 billion to 114 countries.

Annual commitments have averaged about $29 billion over the last three years (FY19-FY21), with about 70 percent going to Africa. Learn more online: IDA.worldbank.org. #IDAworks.

Kindly share our story on; $250M To Support Ghana’s Financial Sector-World Bank

For more stories; click Here.