Ghana’s external debt restructuring has had a significantly smaller impact on the capitalization of banks than the Domestic Debt Exchange Programme (DDEP).
According to rating agency Fitch, regulatory forbearance continues to disguise the full capital impact of the DDEP.
This, it said, has allowed certain losses to be phased into regulatory capital, and accounting that has inflated the value of the new government bonds received in the DDEP.
Meanwhile, Fitch Ratings sees brighter prospects for Ghanaian banks as solvency recovers from the sovereign default and operating environment risks reduce as the sovereign external debt restructuring nears completion and the economy begins to stabilise.
“These themes underpin our ‘improving’ outlook for the banking sector in 2025.
High Profits Driving Capital Recovery:
Ghana’s banking sector delivered strong profits in 2023 and 2024 as a result of high yields on government securities”, the Fitch report mentioned.
It added that the high profits are driving a recovery in the banking sector’s capitalisation after the large losses imposed by Ghana’s Domestic Debt Exchange Programme (DDEP) launched in December 2022.
