Ghana needs distress fund to save struggling businesses, says economic adviser

Ghana needs a permanent institutional arrangement to support struggling businesses and public entities, according to Seth Terkper, Economic Adviser to the President. He proposed establishing a Non-Performing Assets Trust Fund to provide timely financial support and help Ghana withstand future economic shocks.

Terkper made the proposal at a forum in Accra, citing recent experiences such as the banking sector cleanup, domestic debt restructuring, pension fund losses, and sovereign debt challenges. These events, he argued, exposed the need for a dedicated structure to prevent financial difficulties from escalating into wider economic crises. "We need structures. We need institutions to prevent this from happening again," Terkper emphasized, adding that governments, like private businesses, require adequate fiscal buffers.

Drawing lessons from the 2008 global financial crisis, Terkper advocated for a permanent framework that can intervene early to support distressed but viable entities before they collapse. The proposed trust fund would offer financial assistance to private companies, state-owned enterprises, and other public institutions facing financial hardship.

Dr. Johnson Pandit Asiama, Governor of the Bank of Ghana, acknowledged Ghana's existing business rescue framework under the Corporate Insolvency and Restructuring Act, 2020. This act provides distressed but viable companies an opportunity to restructure rather than face liquidation. However, he cautioned that rescue financing must be based on thorough assessments of a company's commercial viability, supported by credible information, competent management, and realistic recovery plans. Asiama also noted that while the banking sector has strengthened with reduced non-performing loans, banks must intensify efforts to meet the regulatory target of 10% NPLs by year-end.

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We need structures. We need institutions to prevent this from happening again.