Phase 2 of Ghana's Domestic Debt Exchange Programme (DDEP) had a relatively low impact on banks’ 2023 audited financial performance, according to the Bank of Ghana’s 2024 Financial Stability Review.

The limited effect is attributed to lower levels of debt holdings among banks and more favourable restructuring terms, with several impairments having already been booked in 2022. Banks also showed a strong recovery in financial performance for 2023.

The report highlighted that in August 2023, the Ghanaian government restructured bond holdings of pension funds totalling GHS30.01 billion in a separate arrangement.

However, the review cautioned that ongoing external debt restructuring, especially concerning Eurobonds, could lead to additional impairments for banks and other participating financial institutions.

“The regulatory reliefs implemented by financial sector regulators, alongside recapitalisation plans and the establishment of the Ghana Financial Stability Fund, will help cushion the financial sector from the impacts of the government debt operation,” the report noted.

Furthermore, the Financial Sector Strengthening Strategy (FSSS), introduced in 2023, coordinates regulatory interventions to promptly address risks in the financial system.

While the domestic debt restructuring has created fiscal space and lowered the debt-to-GDP ratio, further adjustments loom.

On July 14, 2023, Ghana launched the second phase of its DDEP, which included the restructuring of GH¢8.1 billion in Cocoa Bills and $808.99 million in locally issued U.S. dollar-denominated bonds.