Dr Ernest Addison
Ghana’s financial sector is broadly liquid and solvent even though non-performing loans and concentration risks remain high, the Central Bank has stated.
Speaking to journalists in Accra at a press conference on Monday, Dr Ernest Addison, Governor of the Bank of Ghana (BoG), said the total asset base of banks increased to GH¢89.1 billion in July 2017, representing an annual growth of 32.9 percent, compared to 24.6 percent growth a year earlier.
According to him, the growth in assets was funded largely by domestic deposits, which went up by 32 percent on a year-on-year basis, as the industry’s Capital Adequacy Ratio (CAR) averaged 14.3 percent at the end of August 2017, above the 10.0 percent statutory threshold.
Also, he said provisional data on fiscal operations indicated a cash deficit of 4.0 percent of GDP in the year to July 2017, against the set target of 4.1 percent.
“This outturn was on account of realised total revenue and grants of 10.3 percent of GDP, below the target of 11.9 percent.”
Expenditure
Total expenditures, including arrears clearance, the Governor added, was 14.3 percent of GDP below the budgeted estimate of 16.0 percent.
“Financing of the deficit, equivalent to 4.0 percent of GDP, was mostly from domestic sources.”
Re-organization
Reforms to strengthen and re-position the financial sector as a major growth driver by the Central Bank are ongoing and banks are positively adjusting to the latest developments.
The Central Bank Governor said his outfit recently revoked the licences of two insolvent banks to safeguard the potential spillover threat on the financial sector, adding that the roadmap towards recapitalization in accordance with the capital restoration plans set out in April has ended satisfactorily.
“The Bank of Ghana is working towards building a strong and more sophisticated banking sector backed by robust capital frameworks due to increasing risk exposures.
“In particular, the bank is introducing risk-based capital requirements under the Basel II and III framework, as well as enhancing prudential regulations, governance structures of banks, and macro prudential oversight to support a stronger and more sophisticated financial system.”
By Samuel Boadi