Ratings agency, Fitch, has expressed uncertainty about the take-off of the Ghana Financial Stability Fund.

The fund established to provide liquidity support to banks as a result of the Domestic Debt Exchange Programme should have taken off this month.

But speaking at the Africa Webinar Series titled “Reform and New Challenges in Western Africa”, Director of Bank Ratings in charge of Europe, the Middle East and Africa, Tim Slater, said the government is struggling to raise money for the fund to take off.

“The authorities have announced the creation of the Ghana Financial Stability Fund intended to provide support to the banking sector, but it's uncertain when that fund will become operational”.

 “When the capital support and the local liquidity support and even foreign liquidity support will be made available to banks, we do not know. Also regarding the terms of support, it has not been made available”, he stressed.

Tim Slater, however, said the good thing is that over 50% of banks ownership in Ghana are foreign, who would recapitalize their operations.

“I think the mitigating factor challenging the impact of the banking sector is the foreign ownership of the subsidiaries of foreign banks which control over 50% of Ghana banking sector asset. And quite interesting, that will reduce the burden on the authorities [Ghana Government] to provide capital support”.

Government has established the Ghana Financial Stability Fund (GFSF) with a target size of GH₵ 15 billion to be provided by the government and its development partners.

The Fund will provide liquidity to financial institutions that participate fully in the Domestic Debt Exchange Programme (DDEP).