Government has announced plans to inject GH¢2.3 billion in the next 12 months as part of a recapitalization plan for the ailing National Investment Bank (NIB).
The first tranche of GH¢400 million is expected to be transferred to the bank before the end of May, this year.
Minister for Finance, Dr Mohammed Amin Adam, announced this at the monthly media briefing by the Ministry of Finance in Accra last Friday.
Banking sector reforms
Following the completion of the financial sector reforms, all the banks operating in the country successfully recapitalised to GH¢400, except NIB, which is yet to do
so.
The NIB, together with four other banks namely: ADB Bank, OmniBSIC, UMB Bank and Prudential Bank, were given government guarantees through the Ghana Amalgamated Trust (GAT), which was a special purpose vehicle set up to help these five banks recapitalise.
NIB, however, failed to utilise this opportunity as its liquidity and capital challenges far exceeded what was originally envisaged and have still remained under-capitalised.
With the bank being a state bank, the considerations were different, and, therefore the bank has continued to operate till now, despite not meeting the new minimum capital requirement.
Under the country’s three-year programme with the International Monetary Fund (IMF), the government was tasked to complete all outstanding legacy issues with NIB to ensure financial stability.
After the completion of a review to assess the viability of the bank, the government decided and made a commitment to recapitalise the bank.
Cabinet approval
Dr Amin Adam said as part of the country’s IMF programme, Cabinet has approved the plan for restructuring and recapitalisation of NIB.
“This will involve a programmed equity injection of about GH¢2.3 billion over the next 12 months, with the first tranche of GH¢400 million expected to be transferred to NIB before the end of this month,” he told the media.
He said the plan also includes measures to strengthen the governance structure and operational efficiency, enhance supervision, and improve risk management to enhance and sustain the financial viability of NIB.
That, he said demonstrates government’s commitment to implementing the recapitalisation and restructuring programme of NIB.
“The government has intervened in NIB in the past and so this time around, the capital intervention is going to be backed by governance reforms in NIB in order to assure us and the people of Ghana that their money that would be put into NIB would be managed well,” Dr Amin Adam said.
Cedi depreciation
Addressing concerns about the depreciation of the cedi, the Minister gave the assurance that the Ministry of Finance was working with the Bank of Ghana (BoG) to implement measures to stabilise the cedi.
These measures, he said, include fast-tracking the fiscal consolidation process through rationalising spending and enhancing revenue mobilisation; intensification of the gold-for-oil programme, and the appropriate foreign exchange interventions by the BoG.
The rest are the intensification of the gold for reserve programme; the disbursements of the 3rd tranche under the second Review of the International Monetary Fund-supported PC-PEG after the IMF Executive Board approval in June 2024; the disbursement from other ongoing projects including the $150 million World Bank loan and the expected disbursement of $300 million under the World Bank DPO2, possibly in the 3rd quarter of 2024.
He reassured Ghanaians of sufficient foreign exchange supply, discouraging unnecessary forex purchases.
“We wish to assure Ghanaians that there is enough foreign exchange supply. Hence, there is no need to rush and buy forex”, he said.
