World Bank approves $250million loan to bolster Ghana's financial sector

The statement said that the World Bank has pledged $250 million to support Ghana's financial sector stability through a five-year project.

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The loan, approved on May 30, 2024, will be provided by the International Development Association (IDA), a World Bank arm dedicated to assisting low-income countries. This project aligns with Ghana's Financial Sector Strengthening Strategy (FSSS) and aims to address the impact of the country's Domestic Debt Exchange Programme (DDEP) on banks and financial institutions. The project will support the FSSS by contributing to economic stability by recapitalizing viable Banks and Specialized Deposit-taking Institutions (SDIs) impacted by the DDEP.

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"The financial system is the lifeblood of Ghana's economy," said 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 channeled through the Ghana Financial Sector Stability Fund (GFSF), established by the government to support struggling institutions. This project prioritizes immediate assistance to eligible undercapitalized banks and financial institutions, with provisions for future support if needed.

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"The World Bank's support aims to mitigate short-term shocks and promote long-term resilience in Ghana's financial sector," explained Carlos Leonardo Vicente, Senior Financial Specialist, and Team Lead for the project.

"Financial stability is crucial for protecting Ghanaians and preserving jobs."

This initiative complements other World Bank programs in Ghana, including the Development Policy Financing series and the IMF's Extended Credit Facility. These programs focus on broader economic reforms and enable financial institutions to operate profitably. The World Bank also supports projects focused on economic recovery and job creation, such as the Ghana Development Financing Project

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The World Bank's International Development Association (IDA) has a long history of assisting low-income countries. Since its inception in 1960, IDA has provided financial assistance to 114 countries, with a particular focus on Africa