Accra: The Economic Advisor to the President, Seth Terkper, has proposed the establishment of a Non-Performing Assets Trust Fund to provide timely financial support to distressed public and private sector organisations and help Ghana withstand future economic shocks. He highlighted the necessity for a permanent institutional arrangement, drawing on recent experiences such as the banking sector clean-up, domestic debt restructuring, pension fund losses, and sovereign debt challenges.
According to Ghana Web, Terkper made the proposal at a Non-Performing Loans (NPLs) Forum organised by the Chartered Institute of Restructuring and Insolvency Practitioners (CIRIP) Ghana in collaboration with the Bank of Ghana (BoG). The forum, themed 'Financing Distressed Companies: The Impact of Non-Performing Loans (NPLs), IFRS 9 Standards, and Prudential Regulations on Post-Commencement Financing for Distressed Companies under Rescue and Possible Interventions,' discussed the importance of supporting businesses and public entities facing financial difficulties.
Terkper emphasized the need for structured institutions to prevent future economic crises, suggesting that a trust fund would offer financial assistance while preventing widespread economic issues. He stressed that governments require adequate fiscal buffers similar to private businesses to absorb unexpected shocks.
The Governor of the Bank of Ghana, Dr Johnson Pandit Asiama, commented on Ghana's business rescue framework under the Corporate Insolvency and Restructuring Act, 2020 (Act 1015), which allows distressed yet viable companies to restructure instead of liquidating. He insisted that rescue financing should be based on thorough assessments of a company's viability, supported by credible information and realistic recovery plans.
Dr Asiama noted the strengthened banking sector, with a reduced non-performing loans ratio and robust capital adequacy, urging banks to meet the regulatory target of a 10 per cent non-performing loans ratio by year-end. Meanwhile, the President of CIRIP Ghana, Felix Addo, expressed concern over the limited use of business rescue provisions under Act 1015, attributing it to the absence of post-commencement financing, which he identified as a significant obstacle to successful business restructuring.