DDE shrinks banks’ investments in Gov’t securities by 4.8%

Total investments by banks in government securities contracted by 4.8% to GH¢79.2 billion in December 2022, says the Central Bank in its 110th MPC press statement.

The 4.8% contraction in investments, is against the 29% annual growth in investments recorded in 2021.

According to the Central Bank, the 4.8% contraction in investments is due to the rebalancing of asset portfolios in response to the Domestic Debt Exchange Programme.

Meanwhile, Government and the Ghana Association of Banks (GAB) have reached an agreement on the terms of participation for banks in the Domestic Debt Exchange Programme (DDEP).

The new agreement includes a 5% coupon for 2023, as well as a single coupon rate for each of the 12 new bonds, resulting in an effective coupon rate of 9%.

The deal also includes greater clarity on the operational framework and terms of access to the Ghana Financial Stability Fund (GFSF), as well as the removal or amendment of clauses that empower the Republic to vary the terms of the exchange at its discretion.

The GAB has stated that member banks’ participation is subject to their internal governance and approval processes.

The Government has hailed the agreement as a “significant milestone” towards addressing economic challenges and restoring macro-economic stability.