World Bank approves $300mn financing deal for Ghana

The World Bank has approved a $300 million Development Policy Operation for Ghana, marking a crucial step towards the country's economic recovery and resilient growth. Courage Boti, an Economist at GCB Capital, highlighted the significance of this financing deal in a recent interview with CNBC Africa. The financing is part of the First Resilient Recovery Development Policy Financing, aimed at easing fiscal constraints and supporting Ghana's inclusive growth. Boti emphasized that the funding would play a vital role in alleviating the government's financing pressure, reducing reliance on Treasury bills, and decreasing interest obligations in the future. With an additional $600 million from the IMF, the total injection of $900 million into budget financing is expected to improve Ghana's economic outlook and attract private investments. Boti pointed out that the program's success hinges on meeting performance criteria and reforms, signaling to investors that the country is committed to economic stability. Addressing concerns about financial sector stability, Boti noted that despite rising Non-Performing Loans (NPLs) and risks following the domestic debt exchange program, the banking sector remains profitable. The Bank of Ghana's dispensation allows banks a three-year window to recapitalize, with many institutions showing progress through increased profits and retained earnings. The World Bank's additional $250 million fund targeting institutions close to regulatory compliance is also set to further support the sector. Boti underscored the importance of addressing capital requirements to ensure regulatory compliance by 2025, while highlighting the current liquidity and operational stability of banks. The financing deal, along with ongoing reforms, is poised to strengthen Ghana's economy and pave the way for sustainable growth and investment.