Costly financial sector clean-up increased fiscal pressure on Ghana economy – World Bank

The World Bank has described the financial sector clean-up undertaken by the Ghana government as costly, stating that the clean-up and losses in the energy sector increased fiscal pressure on the economy.

In its review of the Ghana public sector finance for 2024, the Bank said an expensive restructuring of the financial services sector weighed on expenditures, costing the equivalent of 8.3 percent of the cumulative GDP between 2017 and 2021.

The country spent an estimated GH¢21 billion on the clean-up.

President Akufo-Addo in his ‘State of the Nation’ address to the 7th Parliament, said “an amount of GH¢21 billion was used to fund the cleaning up exercise. These are painful lessons we all have to imbibe.”

The Bank of Ghana embarked on a banking sector clean-up, recapitalization, and other regulatory reforms from mid-2017 to end-December 2018.

According to the World Bank, happenings in the energy sector also contributed to fiscal pressures.

“Chronic shortfalls in the energy sector have resulted from high fuel costs and expensive take-or-pay contracts combined with distribution losses, poor revenue collection, and below-cost-recovery tariffs,” it said.

By Emmanuel K Dogbevi

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