Ghana’s economy on sound footing before Covid came knocking – BoG Governor

Governor of the Bank of Ghana (BoG) Dr Ernest Addison has noted that the local economy was doing well in 2019 until the coronavirus pandemic came in to disrupt the trend.

Dr Addison explained that the government was able to successfully implemente a sound macroeconomic framework with fiscal consolidation and prudent monetary and exchange rate policies over the last three years, which had yielded good outcomes.

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Inflation at 7.9 percent was within the medium-term target band of 8±2 percent, the exchange rate was relatively stable, the current account had improved significantly alongside three consecutive years of trade surpluses of $2.26 billion, and the Bank of Ghana had built strong foreign exchange reserve buffers of $8.42 billion, he said.

Dr Addison added that economic growth had rebounded strongly to 6.5 percent, supported by growth-oriented government policy initiatives to boost agriculture and manufacturing.

Ghana’s economy on sound footing before Covid came knocking – BoG Governor
Ghana’s economy on sound footing before Covid came knocking – BoG Governor

Delivering the University of Ghana alumni lecture, he said: “In the financial sector, the Bank of Ghana had successfully concluded three years of banking sector reforms, which saw an increase in the minimum capital requirement, revocation of licences of insolvent institutions (“banking sector clean-up”), and a complete overhaul of the regulatory and supervisory frameworks.

“The cleanup resulted in a stable and resilient banking and SDIs sector that is well capitalised, liquid, and solvent. By the end of 2019, all the financial sector soundness indicators showed improvements. The overall capital adequacy ratio for banks had increased to 20 percent well above the regulatory requirement. The Non-performing loans ratio had declined from 21.3 percent at the end of December 2017 to 15.3 percent. Liquidity in the industry had improved and profitability has been on the uptrend.

“We had also seen a significant increase in the use of digital financial services, thanks to some of the measures instituted including National Financial Inclusion and Development Strategy.

“Digital Financial Services Strategy, and the Cash-Lite Policy. This policy framework was intended to scale up access to financial services from 58% in 2015 to 85% by 2023 through increased digital financial services that will help promote economic empowerment of the poor and marginalized.

“So, with the strong economic fundamentals, a sound and stable financial sector, as well as fairly developed payment system architecture, Ladies and Gentlemen, Ghana was prepared to consolidate the gains made with reforms over the past three years even in the face of challenges that typically arise during election years—a track record badly needed to shape Ghana’s story to the international investors. But as the Bible puts it “many are the plans in the heart of a man, but it is the purpose of the Lord that prevails.

“This well-thought-through objective was shattered, if I am allowed to use that word, with the unprecedented and unexpected shock that came with the advent of the coronavirus on the Ghanaian people.

“The real ramifications of this shock and the extraordinary demands on the government as the guardian of public safety and welfare became severe after several weeks.”

By Laud Nartey||Ghana

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