• Business

    Banks receive GHC2.5bn from BoG via GFSF for financial support

    The government has released GH¢2.5 billion to certain banks through the Ghana Financial Stability Fund (GFSF), as revealed by Dr. Ernest Addison, the Governor of the Bank of Ghana (BoG).

    This disclosure came during the 116th regular meeting of the Monetary Policy Committee (MPC), where discussions included global and macroeconomic developments, as well as an assessment of the economy and risks related to inflation.

    The funds are intended to assist banks in overcoming financial challenges associated with the Debt Service Suspension Initiative (DDEP).

    The Ministry of Finance initiated the disbursement under this program in the previous year, established by the government to alleviate the financial impacts of the DDEP.

    This initiative is part of Ghana’s three-year $3 billion Extended Credit Facility (ECF) program with the International Monetary Fund (IMF), signed in 2022 to provide balance of payment support, restore macroeconomic stability, spur growth, and address the country’s increasing public debt.

    While the specific banks benefiting from the GFSF were not mentioned by Dr. Addison, he highlighted that, despite challenges, the banking industry remained robust and profitable. The sector’s performance improved, with ongoing recapitalization efforts by shareholders and support from the GFSF contributing to its stability, as indicated by the latest stress tests.

    “As at the end of 2023, the data shows that the banking sector re­mains stable, liquid, and profitable. Profitability improved for the sec­tor from the loss position record­ed in the 2022 audited accounts, reflecting sustained increases in net interest income and fees and commissions,” the Chairman of the MPC stated.

    He said the industry’s balance sheet was generally strong, un­derscored by increased assets in December 2023, funded largely by deposits.

    “Key financial soundness indica­tors remained broadly positive with the Capital Adequacy Ratio (adjust­ed for reliefs) above the regulatory minimum, while liquidity and profitability ratios were higher in December 2023 compared to the same period last year,” Dr Addison stated.

    Dr. Ernest Addison, the Governor of the Bank of Ghana, reported that the Non-Performing Loan (NPL) ratio increased in 2023 due to general repayment challenges faced by borrowers. This development reflected the impact of macroeconomic challenges encountered in 2022.

    Regarding the recapitalization of banks, Dr. Addison stated that some banks were ahead of the 2026 recapitalization deadline, and some had already sought additional funds from their shareholders to bolster their capital.

    He emphasized that the Bank of Ghana did not have concerns about the capital levels of the banks. According to him, the profits declared by the banks in the previous year were sufficient to meet their capital requirements.

    “The Bank is closely monitoring the capital restoration efforts of the banks in line with approved plans, including through support from the Ghana Financial Stabil­ity Fund. It is expected that early recapitalisation and effective risk management by banks will help promote overall banking sector stability and resilience and ensure effective financial intermediation to strengthen the economic recovery efforts,” Dr Addison said.


    Leave A Comment