World Bank Approves $250 Million Loan to Strengthen Ghana’s Financial Sector
The World Bank has approved a $250 million loan to support the stability of Ghana’s financial sector through a five-year project.
Announced on May 30, 2024, the loan will be provided by the International Development Association (IDA), the World Bank’s arm dedicated to assisting low-income countries. This initiative aligns with Ghana’s Financial Sector Strengthening Strategy (FSSS) and aims to mitigate the effects of the country’s Domestic Debt Exchange Programme (DDEP) on banks and financial institutions. The project will contribute to financial stability by recapitalizing viable banks and specialized deposit-taking institutions (SDIs) impacted by the DDEP.
“The financial system is the lifeblood of Ghana’s economy,” stated Robert R. Taliercio, World Bank Country Director for Ghana, Liberia, and Sierra Leone. “This project will strengthen financial stability by providing solvency support to banks and institutions affected by the DDEP, ensuring continued access to essential financial services for Ghanaians.”
The funds will be managed through the Ghana Financial Sector Stability Fund (GFSF), established by the government to assist struggling financial institutions. The project will prioritize immediate assistance to undercapitalized banks and financial institutions, with provisions for future support as necessary.
Carlos Leonardo Vicente, Senior Financial Specialist and Team Lead for the project, explained, “The World Bank’s support aims to mitigate short-term shocks and promote long-term resilience in Ghana’s financial sector. Financial stability is crucial for protecting Ghanaians and preserving jobs.”
This initiative complements other World Bank programs in Ghana, such as the Development Policy Financing series and the IMF’s Extended Credit Facility, which focus on broader economic reforms and enabling financial institutions to operate profitably. The World Bank also supports projects focused on economic recovery and job creation, including the Ghana Development Financing Project.
The IDA, established in 1960, has a long history of assisting low-income countries, with a particular focus on Africa. Since its inception, IDA has provided financial assistance to 114 countries, fostering development and economic stability.
Source: Graphic Online
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