Govt in talks with partners to support Financial Stability Fund – Finance Minister

The government has assured financial sector participants that it is engaging with the World Bank and the African Development Bank (AfDB), among others, to provide funding for the Ghana Financial Stability Fund (FSF).

The FSF was set up by the government in December 2022 following its Domestic Debt Exchange Program (DDEP) with the object of providing liquidity cushioning to financial sector players who may be negatively impacted by their participation in the program.

Per an initial communication by the Minister of State at the Ministry of Finance, Mohammed Amin Adams, an initial funding of US$ 750 million out of a projected GHC 15 billion (US$ 1.25 billion) is expected to be paid into the FSF, including a US$ 250 million support from the World Bank.

Addressing the press on Sunday, June 18, 2023, Finance Minister Ken Ofori-Atta revealed that the government is expecting some US$6.2 billion from its multilateral partners between 2023 and 2026.

He disclosed further that the government is still in talks with its bilateral partners about funding the FSF.

“We are also collaborating with other development partners (including the World Bank and the AfDB) to finance the Ghana Financial Stability Fund to provide liquidity and solvency support for the financial sector as a result of the assessed impact of the DDEP”, Mr. Ofori-Atta stated.

Last month, the Finance Ministry stated that it was working with the Central Bank and the IMF on formulating a detailed turnaround strategy for the financial sector by the end of June.

Almost all banks, including reputable international banks, recorded losses or starkly reduced profits for 2022 owing to significant write-offs of funds advanced to the government and accounting treatments of impairments.

Additionally, asset management companies have recently implemented fair value treatment of clients’ investments on redemptions, affecting overall confidence in the financial industry.