Gov’t provides GHS 15bn support to financial institutions via its Financial Stability Fund
Government has announced a GHS 15bn liquidity support to financial institutions that decide to participate in its Domestic Debt Exchange Programme (DDEP).
The liquidity support is to aid the various financial institutions in the country meet their obligations to clients.
In a statement issued by the Bank of Ghana (BoG) on Wednesday, December 7, the banking sector regulator noted that the FSF will be managed under unique operational guidelines developed by the Financial Stability Council.
According to the Central Bank, funds from the FSF can be accessed from the date of completion of the DDEP.
“The GFSF is being established with a target size of GHC 15 billion to be provided by the Government of Ghana and its development partners.
“The Fund will provide liquidity to financial institutions that participate fully in the Debt Exchange. All financial institutions (banks, SDIs, pension schemes, collective investment schemes, fund managers, broker/dealers, insurance firms) that fully participate in the Debt Exchange can access the GFSF for augmented liquidity support, with effect from the date of completion of the Debt Exchange.
“The Fund will be managed by the Bank of Ghana under unique operational guidelines being developed by the Financial Stability Council.
“The Financial Stability Council will provide ongoing advice and oversight for the use of the GFSF,” read parts of the statement.
The FSF according to the Finance Minister, is to help minimise the impact of the DDEP on the country’s financial sector.
Under the DDEP, domestic bondholders will be required to exchange their existing debt instruments for new ones.
According to the Finance Minister, existing bonds as of December 1, 2022 will be exchanged for a set of four (4) new bonds maturing 2027, 2029, 2032 and 2037.
The annual coupon on the new bonds will be set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity.
