Credit to Private Sector by Banks slashed

The growth in Deposit Money Banks’ (DMBs) credit to the private sector and public institutions has declined slightly recording GH¢7,358.1 million or 16.5% in the 12-month period to March 2020, down from GH¢8,594.0 million or 23.9% over the corresponding period in 2019.

Private sector credit accounted for a share of GH¢6,617.5 million or 89.9% compared with GH¢7,001.8 million or 81.5% during the same period in 2019.

The flow of credit to the private sector was concentrated in five sub-sectors including services, commerce and finance, construction, manufacturing and transport, storage and communication, which collectively absorbed 79 percent of the credit extended over the period.

Outstanding credit to the private sector at the end of March 2020 was GH¢45,339.5 million compared with GH¢38,722.1 million last year.

In real terms, growth of credit to the private sector over the 12-month period to March 2020 was 8.6 percent, down from 14.6 percent during the corresponding period in 2019, thus, moving below the long-term trend DMBs average lending rates similarly eased downward by 71 basis points from 23.09 percent in April 2019 to 22.38 percent in April 2020.

The average rate on 3-month term deposits remained unchanged at 11.50 percent. The general decline in nominal interest rates and the recent jump in inflation pushed real interest rates significantly down.