13 Banks Meet Recapitalization Targets Post-DDEP, One State-Owned Lags – IMF

13 banks in Ghana have successfully met their recapitalization targets following the shocks of the Domestic Debt Exchange Programme (DDEP), positioning them to restore their Capital Adequacy Ratio (CAR) to the regulatory 13% threshold by end-2025, the International Monetary Fund (IMF) has revealed.

According to the IMF’s latest Country Report, while the majority of banks have made significant strides in addressing capital shortfalls.

“One state-owned bank and a few others remain materially behind schedule, due to delays in shareholder capital commitments, elevated levels of non-performing loans (NPLs), and slow recognition of credit impairments and provisioning.”

These under-performing banks are now under intensified supervision by the Bank of Ghana, which is enforcing corrective measures to ensure compliance with recapitalization deadlines. Parliamentary approval and operationalization of the World Bank-funded segment of the Ghana Financial Sector Stability Fund (GFSF) could provide additional support, contingent on qualifying banks securing the required capital injections.

Despite some improvement, Ghana’s banking sector continues to grapple with persistently high NPLs. The overall NPL ratio fell slightly from 26.7% in the first quarter of 2024 to 22.6% by year-end, but remains well above prudent thresholds.

Regulators are urging banks to step up credit risk management and enhance loan classification. The IMF notes that “specialised deposit-taking institutions (SDIs) which are key to promoting financial inclusion remain weighed down by undercapitalisation and unresolved legacy challenges.”

Implementation gaps also persist under the Ghana Financial Sector Strengthening Strategy (GFSSS), designed to tackle systemic weaknesses in the banking sector.

Meanwhile, the Bank of Ghana is advancing prudential reforms, including Basel II and III standards, and has formally communicated that all post-DDEP regulatory reliefs will expire by end-2025.

The IMF commended the authorities’ continued focus on safeguarding financial stability, but warned that “sustained efforts are needed to address credit quality and financial sector legacy issues to support durable recovery and inclusive growth.”

Read More