Ghana Financial Stability Project

active

The Government of Ghana (GoG) has established the Ghana Financial Stability Fund (GFSF) to provide solvency and liquidity support to financial institutions impacted by the debt restructuring. The solvency window of the GFSF will include Fund A1 (to be capitalized by the GoG using IDA credit proceeds from this project) and Fund A2 (capitalized by the GoG). This project will contribute to the government’s efforts to support the recapitalization of viable financial institutions to safeguard financial stability. The project includes three components: Component 1: Capitalization of Fund A1 of the GFSF. This component will capitalize Fund A1 of the GFSF to support the recapitalization of viable banks and Specialized Deposit-taking Institutions (SDIs). Fund A1 will acquire Additional Tier 1 securities issued by banks and SDIs. It will provide cash to banks and SDIs in exchange for securities that qualify as capital. As a result, Fund A1 will help banks and SDIs meet the minimum capital adequacy ratios stipulated by Bank of Ghana (BoG). Component 2: Technical Assistance: This component will finance technical assistance to improve BoG’s assessment of banking sector risks and inform the development of appropriate remedies, enhance Ghana Deposit Protection Corporation’s (GDPC’s) preparedness, and build the capacity of BoG, GDPC, and beneficiary banks and SDIs. Specifically, this component will finance an asset quality review for banks, technical assistance to upgrade the depositor payout system of the GDPC, and the upgrade/establishment of beneficiary banks and SDIs’ Environmental and Social Management Systems (ESMSs).Component 3: Project management, monitoring and evaluation. This component will cover project implementation costs, including the compensation of an investment advisory firm to support the implementation of Fund A1, coordination, procurement, financial management, monitoring and evaluation, and other related costs.