Domestic debt gloom

Ghana: Debt restructuring, macro challenges stoking fears over banks’ solvency

By Jonas Nyabor, Sherif Tarek

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Posted on May 3, 2023 13:00

© People walk past the Bank of Ghana in Accra, Ghana, November 28, 2018. REUTERS — People walk past the Bank of Ghana in Accra, Ghana, November 28, 2018. REUTERS

With Ghana’s much-discussed Domestic Debt Exchange (DDE) programme squeezing its financial ecosystem, the banking sector’s solvency could be facing risks, analysts say. Raising the alarm last week were two of the country’s top banks – GCB and StanChart – among others reporting 2022 losses, which might be aggravated by the debt restructuring that kicked off last December, as well as mounting macroeconomic challenges.

“It certainly is true that the entire banking sector is highly exposed to sovereign debt. There is significant pressure on the banking system’s capitalisation, its solvency as a whole as a result of the domestic exchange,” Tim Slater, director at Fitch Ratings, tells The Africa Report.

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