Ghana Non-Performing Asset Recovery Trust (1990)

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Media Type

Document

Media Date

June 21, 2019

Additional Information

The Ghanaian financial sector was in severe distress in 1985 after a decade of high and variable rates of inflation, low economic growth, and financial policies seen as deficient. Ghana, with World Bank support, implemented a Financial Sector Adjustment Program (“FINSAP”) supported by a Financial Sector Adjustment Credit I between 1988-1991 and a Financial Sector Adjustment Credit II between 1991-1997. As part of FINSAP, the Government established the Non-Performing Assets Recovery Trust (“NPART”) as a temporary public asset management company under Provisional National Defence Council Law 242 on February 28, 1990, with an initial 6-year statutory life, for the purpose of: 1) facilitating the restructure and recapitalization of major state-owned banks; 2) expediting the restructuring of public- and private-enterprises; and 3) maximizing recovery value of non-performing assets (“NPAs”) to reduce the Government’s fiscal burden. NPART was given a Cedi 18 billion Aggregate Recovery Target of a total of Cedi 50 billion in acquired NPAs (exchange rate for US $1 varied from Cedi 181 in February 1988 to Cedi 2000 in July 1997). By NPART’s cessation on June 30, 1997, recovery was approximately Cedi 19.6 billion, or about 10% above the target. Evaluations indicated that the aggregate condition of restructured state-owned banks had improved, representing a satisfactory performance overall. However, NPART was also criticized for the lack of institutional independence, transparency, and overall legal framework. Moreover, the use of NPART to facilitate corporate restructuring became politically difficult and most of the assets were just liquidated.

Intervention

Bad Bank Broad-Based Asset Management Program

Content Type

Working Paper

Publisher(s)

Yale University: School of Management: Yale Program on Financial Stability (YPFS)

Author(s)/Creator(s)

Riki Matsumoto

Language(s)

English

Case Series

2020 YPFS Preliminary Discussion Drafts

Country(ies) or Region(s)

Ghana