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Debt exchange: Govt to establish GH₵15billion fund for financial institutions that participate


The Financial Stability Council (FSC) has announced that it has begun a process to establish a fund that will provide liquidity to financial institutions that participate fully in Ghana's Domestic Debt Exchange programme.

Known as the Ghana Financial Stability Fund (GFSF), the fund is being established with a target size of GH₵15 billion to be provided by the government and its development partners.

The FSC in a statement issued today said 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 programme.

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," the statement said.

The Financial Stability Council was established in December 2018 by Executive Instrument, to "identify and evaluate the threats, vulnerabilities, and risks to the stability of the financial sector". The Council is chaired by the Governor of the Bank of Ghana, and has members from the Bank of Ghana (Deputy Governor), Ministry of Finance (Deputy Minister), Securities and Exchange Commission (Director General), National Insurance Commission (Commissioner), National Pensions Regulatory Authority (Chief Executive Officer), and Ghana Deposit Protection Corporation (Chief Executive Officer).

The Debt Exchange programme launched by the government on December 5, 2022, is an invitation for the voluntary exchange of approximately GH₵137 billion of the domestic notes and bonds of the Republic, including E.S.L.A. and Daakye bonds, for a package of new bonds to be issued by the Republic.

The Exchange excludes Treasury Bills in totality, and notes and bonds held by individuals (natural persons).

Other measures

Other measures announced by the FSC include a directive to financial sector regulators to temporarily reduce regulatory capital and liquidity requirements for regulated firms and schemes that voluntarily participate in the debt operation.

Regulators will also suspend or delay any new rules that will have an adverse impact on liquidity or solvency. Each regulator will communicate more specific reliefs to its regulated firms/schemes in due course," the statement said.

The statement added that regulators were already "in discussions with external auditors of financial institutions and will provide guidance to ensure a standardized approach to the accounting treatment applied to the Debt Exchange".

Read the entire statement below;

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