Ghana’s banking industry is showing signs of resilience following the shocks of the Domestic Debt Exchange Programme (DDEP), with 13 previously undercapitalized banks now meeting or surpassing their recapitalization thresholds by the end of 2024.
These institutions are expected to fully restore their Capital Adequacy Ratio (CAR) to the regulatory minimum of 13 percent by the close of 2025, according to the latest International Monetary Fund (IMF) Country Report.
However, the report flags lingering vulnerabilities. At least one state-owned bank and several others have failed to meet their capital restoration timelines due to shareholder funding delays, persistent non-performing loans (NPLs), and weak provisioning practices. These banks are now subject to stricter oversight by the Bank of Ghana, which is enforcing corrective action plans to help close the gap.
Support from the World Bank-backed Ghana Financial Sector Stability Fund (GFSF) could offer some relief—pending parliamentary approval and contingent on qualifying capital injections from shareholders.
Though Ghana’s NPL ratio has improved marginally—falling from 26.7% to 22.6% in 2024—it remains a significant concern. Authorities are intensifying reforms to improve credit quality, including mandating tighter credit risk management, more rigorous loan classification, and closer scrutiny of NPL reduction plans.
The IMF also raised red flags about the ongoing struggles of specialized deposit-taking institutions (SDIs), which play a crucial role in deepening financial access but remain undercapitalized and hampered by legacy issues.
Meanwhile, the Bank of Ghana is advancing key regulatory reforms, including the rollout of Basel II and III frameworks, and has formally notified financial institutions that all regulatory relief measures introduced post-DDEP will expire by the end of 2025.
As Ghana’s financial sector pushes toward full recovery, regulators face a delicate balancing act—shoring up weak banks while safeguarding overall financial stability.
