The Government of Ghana is in advanced negotiations with the World Bank to secure a $250 million funding facility aimed at supporting banks and financial institutions affected by the Domestic Debt Exchange Programme (DDEP).

This initiative is part of the broader Ghana Financial Stability Project and is expected to provide much-needed capital to financial institutions that have struggled in the aftermath of the debt restructuring programme.

Head of Banking and Non-Banking at the Ministry of Finance, Andrew Amerkson, disclosed that the government is prioritizing the recapitalization of at least eleven financial institutions in 2025.

Speaking at the launch of the Ghana Association of Savings and Loans Companies’ five-year strategic plan in Accra, he reaffirmed the government’s commitment to stabilizing the financial sector.

Delivering a speech on behalf of Finance Minister Dr. Cassiel Ato Forson, Amerkson emphasized the importance of recapitalization efforts.

“The government has long been proactive in ensuring the stability of the financial sector. We designed the Ghana Financial Stability Fund and allocated 5.7 billion cedis to recapitalize bonds, which has been critical in stabilizing the financial system,” Dr. Forson remarked.

Dr. Forson further highlighted the impact of past interventions, citing the success of the Ghana Financial Stability Fund A2, which was introduced in the previous year.

“At the end of last year, Fund A2 supported 11 financial institutions, including four banks, four capital market operators, and three insurance companies. This demonstrates the government’s unwavering commitment to ensuring the long-term stability of our financial sector," he added.

The Finance Minister confirmed that securing the World Bank loan would be a crucial step in addressing the financial fallout from the DDEP.

“We have engaged with the World Bank for a loan facility of 250 million dollars, which will specifically support the recapitalization of banks and savings and loans institutions (SDIs). This initiative is part of the World Bank-funded Ghana Financial Stability Project and aims to promote financial stability across the country,” Dr. Forson stated.

Looking ahead, the government remains optimistic that this funding will strengthen financial institutions and bolster economic resilience.

"By securing this facility, we are not just addressing immediate liquidity concerns, but also ensuring that our banks and other financial institutions remain resilient and continue to contribute effectively to the economy," Dr. Forson concluded.

The DDEP impairment losses have technically rendered some Ghanaian local-owned banks insolvent, which will require additional capital support from shareholders or their full participation in the Ghana Financial Stability Fund. According to an IMF Country report (23/168), the World Bank, other donors and government of Ghana were expected to provide GFSF to an amount of GH¢1.5billion equivalent to facilitate the build- up of capital buffers for qualifying banks.

Government’s recent move comes at a crucial time as the government seeks to cushion the financial sector from the lingering effects of the DDEP and restore confidence in the banking industry.