Source: newsthemegh.com
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 specialized deposit-taking institutions (SDIs) affected by Ghana’s Domestic Debt Exchange Program (DDEP), the initiative would assist 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.
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.
“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 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,” stated Carlos Leonardo Vicente, Team Lead and Senior Financial Specialist.
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.
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.
It also supports other World Bank-funded initiatives in Ghana that are meant 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.
Since its founding in 1960, the World Bank’s International Development Association (IDA) has assisted the world’s poorest nations by offering grants and low- or no-interest credits for initiatives that promote economic growth, fight poverty, and enhance the lives of the impoverished.
For the 74 poorest nations in the world, 39 of which are in Africa, IDA is one of the main sources of aid.
The 1.3 billion individuals who reside in IDA nations benefit from resources provided by IDA.
IDA has given 114 countries $458 billion since 1960. The last three years (FY19–FY21) have seen annual commitments of over $29 billion, with roughly 70% going to Africa.