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Debt Restructuring Challenges in Ghana's Banking Sector: Non-Performing Loans Reach 5-Year High of 20%

In the current economic climate, it's crucial for banks to minimize non-performing loans amid recent debt restructuring challenges. Disturbingly, Ghana's banking sector records a 20% non-performing loan ratio, the highest in five years, signaling ongoing financial stress.

Debt Restructuring Challenges

Ghana's Non-performing loans reach 5-year high of 20%

Bank of Ghana The data from the Bank of Ghana reveals a 0.9 percentage point increase since July 2023, underscoring a concerning trend where 1 in 5 loans remains unpaid or significantly overdue by August 2023. This escalating ratio since October 2022, starting at 14%, indicates borrowers aren't refinancing substantial concessions, jeopardizing the banking sector's health.

The non-performing loan ratio, averaging 17.9% from January to August 2023, surpasses previous years. According to IMF standards, loans are non-performing if borrowers are over 90 days late in repaying both principal and interest or if full payments are unlikely. Ghana's recent debt restructuring, prompted by government debt repayment challenges, resulted in banks absorbing substantial losses in 2022.

Source: Daniel Kwabena Tetteh & Anthony Manu

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