The World Bank has agreed to provide $250 million by the end of the third quarter of 2023 to support the Ghana Financial Stability Fund, Finance Minister Ken Ofori-Atta has disclosed.
The Financial Stability Fund is a $1.5 billion fund being set up to support financial institutions that might face challenges after the Government’s Domestic Debt Exchange Programme (DDEP).
“We are establishing a stability fund to ensure that we can intervene in the event of any insolvency and liquidity issues. The World Bank has committed $250m of that,” Mr Ofori-Atta said at a news conference in Washington D.C, U.S.
The news conference was a wrap-up of Ghana’s engagement at the just-ended Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) in Washington DC, U.S.
The fund is to serve as a safeguard against future financial instability, allow the government to respond promptly to any threats to the financial regime, and assure investors that it is committed to keeping a stable financial sector.
“The Government itself will put some money into that and we expect really, latest by the third quarter, for the World Bank resources to come through,” Mr Ofori-Atta said.
The Minister also indicated that the Government was in talks with authorities of the African Development Bank and other donor partners for more resources to shore up the Fund.
The government last February secured some 83 billion through the DDEP from domestic bondholders to provide creditors assurance for a $3bn loan-support programme from the IMF.
The completion of the DDEP also paved the way for the Government to engage with external creditors on debt treatment, leading to the Ghanaian delegation attending the Spring meeting of the IMF/WBG to speed up processes.
At the meetings, Kristalina Georgieva, Managing Director, IMF said she was confident that “the [external] creditors are going to move, and we [IMF] are going to move swiftly… stay tuned and stay positive.”
Meanwhile, China, Ghana’s largest external creditor, has agreed to quicken the processes for its debt treatment as the country looks to get the $3bn facility by the end of the second quarter of 2023.
The loan-support programme has become necessary due to Ghana’s current economic challenges occasioned by the impact of the COVID-19 pandemic, Russia’s war in Ukraine, inflationary pressures, exchange rate depreciation, and lack of access to the capital market.
The Government has assured Ghanaians that it would soon alleviate their plight through the Fund’s support programme, as well as other homegrown policies and measures.