Governor of the Bank of Ghana (BoG) Dr Ernest Addison has noted that banks in Ghana have recorded strong growth in deposits and investments.
He said that the Monetary Policy Committee (MPC) noted that the performance of the banking sector of the local economy remains strong.
Speaking at the MPC press conference at the headquarters of the central bank in Accra on Monday November 23, Dr Addison said “the Committee noted that global GDP growth rebounded in the third quarter of 2020 after the sharp fall in the second quarter, but is expected to slowdown in the last quarter as rising COVID-19 cases moderate the recovery process.
“The supportive global monetary policy stance, together with fiscal stimulus packages, is likely to persist over the medium-term to support the growth recovery process. Consequently, global financing conditions are expected to remain favourable in the near-term.”
He added “On the Ghanaian economy, evidence from high frequency indicators – the CIEA outturn for October 2020, improved consumer and business confidence, and strong liquidity flows – have helped to deliver a faster than expected recovery in economic activity.
“These flows include payments to contractors, SDI depositors, clients of SEC licenced fund managers, micro and small business loans provided by government through the National Board for Small Scale Industries, and the policy and regulatory reliefs to banks and SDIs. Based on these observations, the Bank maintains that growth will perform better than earlier projected.
“The sector recorded strong growth in deposits and investments and solvency indicators were significantly higher than regulatory thresholds. Pandemic tailrisks, that is, pandemic-related impact on non-performing loans, would require continuous supervisory vigilance.
“On budget implementation, the Committee noted that the expansionary fiscal stance to address the COVID-19 pandemic has also led to deviation from the path of fiscal consolidation. Looking ahead to 2021, a decisive fiscal correction plan would be needed to contain fiscal risks in the medium-term.
“The Committee noted that inflation has eased following the spike to 11.4 percent. At 10.1 percent for October 2020, inflation is almost at the upper band target. The fiscal and monetary policy measures, which have increased liquidity in the economy, appear not to be impacting inflation, partly due to the existence of the output gap. As a result, the Committee expects these conditions to support inflation to return to its central path by the second quarter of 2021.”
The MPC maintained the policy rate at 14.5 per cent.
By Laud Nartey|3news.com|Ghana