On May 30, 2024, the World Bank approved a $250 million International Development Association (IDA) credit for the Ghana Financial Stability Project. This five-year initiative aims to 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) affected by Ghana’s Domestic Debt Exchange Program (DDEP).
The financial system is crucial to the functioning of the Ghanaian economy, providing essential services to households, firms, and the government while supporting economic growth. To mitigate the severe impact of the DDEP on financial institutions, the Government established the Ghana Financial Sector Stability Fund (GFSF). This fund provides solvency support to banks, pension funds, insurance companies, fund managers, and collective investment schemes.
“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 economy by supporting depositors' access and other financial consumers' access to savings, payments, and other core financial services provided by adequately capitalized banks and SDIs.”
The project is expected to immediately benefit eligible undercapitalized but viable banks and SDIs. It will also be accessible to other banks and SDIs that may need support in future due to potential new losses or unexpected challenges.
“The World Bank Group’s support aims to help address short-term shocks to improve prospects for long-term sustainable development and 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 existing World Bank initiatives such as its Development Program Financing series and IMF-Extended Credit Facility. These programs support reforms aimed at improving macroeconomic conditions enabling financial institutions to operate profitably while generating internal capital. Additionally, it aligns with other World Bank-funded projects focused on economic recovery and job creation in Ghana—such as the Ghana Development Financing Project which supported establishing the Development Bank of Ghana providing long-term financing for small- and medium-sized enterprises.
*The International Development Association (IDA), established in 1960 by The World Bank helps impoverished countries through grants low-to-zero-interest credits for projects boosting economic growth reducing poverty improving lives across 74 poorest nations including 39 African countries positively impacting over 1.3 billion people since inception IDA has committed $458 billion averaging $29 billion annually over recent years with approximately 70% allocated towards Africa learn more at IDA.worldbank.org #IDAworks.*