Dr Ernest Addison Bank Of Ghana Governor 1

Governor of the Bank of Ghana (BoG), Dr Ernest Addison, has said that the three-year financial sector reforms (2017-2019) that led to the collapse of some domestic banks including Unibank, UT, Capital, Beige Bank and Heritage Bank, was successfully done. He recounted that the exercise included an increase in the minimum capital requirement for banks, revocation of licences of insolvent institutions, and an overhaul of the regulatory and supervisory frameworks. In the end, the sector became better capitalized, liquid, profitable, more resilient with adequate capital buffers, and more operationally efficient, he said.

“Though the closure of the defunct banks was difficult and painful, the measures taken by the Bank of Ghana, supported by the Government’s assumption of the payments due depositors, helped avert the total collapse of the banking sector and by extension the rest of the financial sector. “Although we note the sanity and resilience in the banking system after the clean-up exercise, the full benefits would be achieved with a much faster completion of the legal proceedings including over 1,300 civil and 21 criminal cases currently pending at different stages in our courts,” Dr Addison said at the Chartered Institue of Bankers 2023 Governor’s Day in Accra.

Touching on the economic crisis that hit the country recently, Dr Addison also recounted that with strong economic fundamentals, a sound and stable financial sector, as well as relatively developed payment system architecture, the country had been placed on a path of transitioning to accelerated growth and development, even in the face of challenges that typically come with the political cycle.

Then came an unprecedented global shock in 2020, which had a three-pronged impact on health, social life, and the economy, he said. “I am sure the memories of the devastating effects of the pandemic and the global uncertainty it triggered are still fresh on our minds. This notwithstanding, the strong response with clear public policy initiatives by the government helped manage the consequences of the pandemic effectively. Of course, protecting lives and livelihoods at all costs required exceptional financing.

“Fortunately, through the swift interventions of the international financial institutions, the IMF (through the Rapid Credit Facility) and the World Bank, a significant portion of this financing was met. In addition, the Bank of Ghana had to fall back on its buffers and policy space to provide the needed additional support through the purchase of GHS10 billion of the Government’s COVID-19 bonds, which helped to close the exceptional financing gap. These interventions from the Bank of Ghana, the IMF, and the World Bank, assisted the government in navigating and effectively containing the devastating effects of the pandemic.

“Despite the additional support to the government, the fiscal cost associated with containing the pandemic was large and exacerbated by the spillovers from the Russia – Ukraine war in 2022. As a result, sovereign spreads on Ghana bonds widened, and Credit Rating Agencies further downgraded Ghana’s sovereign debt rating, which effectively blocked Ghana’s access to the international capital markets.

“Thus, the planned external borrowing to the tune of about US$3 billion was missed. It is important to state that Ghana’s annual external debt service payments and energy payments alone was in the range of 3 to 4 billion US dollars annually as at 2020. A significant part of the annual borrowing was therefore to manage debt liabilities, including energy-related payment obligations.”

By: Laud Nartey

fadmin

By fadmin

Benjamin Mensah [Freshhope] is a young man, very passionate about the youth of this Generation. Very friendly, reliable and very passionate about the things of God and all that I do. The mission is to inform, educate and entertain. Feel free to send your whatsapp messages to +233266550849 and call on +233242645676

Leave a Reply

Verified by MonsterInsights