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Dr Ernest Addison, Governor of the Bank of Ghana (BoG) alluded to plans to reverse all countercyclical measures implemented in the financial sector due to the COVID-19 pandemic to allow the system to function properly.
He therefore instructed the banks to remain vigilant, to upgrade staff capacities and improve governance and risk culture to avoid any shock and maintain the dynamism of the sector.
“Over the next three years, in the aftermath of the pandemic, the Bank of Ghana will carefully unwind the countercyclical measures implemented and allow the financial system to operate without the regulatory forbearance put in place due to the pandemic,” a- he declared.
Speaking at this year’s University of Ghana Alumni Lecture Series, Dr Addison said the financial sector needs continued regulatory and policy attention to identify and mitigate emerging risks and ensure financial stability.
He said the economic impact of the pandemic could lead to an increase in non-performing loans and some erosion of bank capital, adding that the central bank was placing more emphasis on identifying early warning signals and launching prompt corrective action.
“Symptoms of a weaker bank are usually poor asset quality, lack of profitability, loss of capital, excessive leverage, excessive risk exposure and poor governance as well as liquidity issues.
“In this regard, the Bank of Ghana will continue to strengthen all regulatory measures implemented over the past three and a half years to maintain confidence and preserve financial stability,” said Dr Addison.
He said the Central Bank was optimistic that with the approach, a resilient and capable financial sector would weather the storms caused by the pandemic and ensure the strength of the industry.
The government, before the pandemic, launched and implemented policies, including the National Financial Inclusion and Development Strategy, the Digital Financial Services Policy and the Cash-Lite Roadmap, with the overall objective of deepening financial inclusion and accelerate the transition to digital payments in the country. .
Dr Addison noted that the considerable progress made in this area has significantly contributed to the fight against the pandemic with an exponential growth in the volumes and values of digital payment platforms in the country.
“The promotion of FinTech was already at the forefront of the Bank of Ghana’s agenda and we will continue to invest in supporting infrastructure, improve the regulatory environment, as well as contain all associated risks to help to achieve financial inclusion and digital financial transactions. to support the national objective, ”assured the governor.
Regarding the impact of the pandemic on the Ghanaian economy, Dr Addison explained that the external shock of Covid-19 had partly reversed the progress made on the front of macroeconomic stability.
According to him, so far, the budgetary costs, in terms of the stimulus package deployed to mitigate the negative socio-economic consequences on households and businesses, were estimated at more than GH ¢ 11.2 billion.
“If you add the financial sector costs and the energy sector costs, the estimated financial burden from these three sources alone is GH ¢ 24 billion.
“In six months, it was estimated that the government had paid GH ¢ 4.7 billion in excess capacity payments in the energy sector. This pushed the debt-to-GDP ratio above the threshold for countries with access to markets, ”he said.
— GNA
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