The Bank of Ghana (BoG) has revealed that Phase 2 of the Domestic Debt Exchange Programme (DDEP) had a relatively low impact on the 2023 audited financial performance of banks. This conclusion was part of the findings in the BoG’s 2024 Financial Stability Review.
The report highlighted that the lower levels of holdings and better restructuring terms contributed to the minimal impact. Additionally, some impairments had already been accounted for by banks in 2022, which helped mitigate the overall effect on financial performance. Banks also reported a strong rebound in financial performance in 2023.
In August 2023, the Government of Ghana negotiated and restructured bond holdings of pension funds totaling GHS30.01 billion. Looking ahead, the report mentioned that the external debt restructuring, particularly the Eurobonds, could have implications for further impairments by banks and other participating financial institutions.
The BoG emphasized that regulatory reliefs, recapitalization plans, and the establishment of the Ghana Financial Stability Fund would help mitigate the impact of the government’s debt operations on the financial sector. The Financial Sector Strengthening Strategy (FSSS) was also developed to coordinate policy regulatory interventions and promptly address risks to the financial system.
The report concluded that the domestic debt restructuring created fiscal space for the government and contributed to lowering the debt-to-GDP ratio.