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The Governor of the Bank of Ghana, Dr. Ernest Addison, has hinted at plans to undo all counter-cyclical measures implemented in the financial sector due to the COVID-19 pandemic to allow the system to function properly.
Therefore, it has tasked the banks to remain vigilant, improve staff capacities, and improve governance and risk culture to avoid any impacts and maintain the vitality of the sector.
“Over the next three years after the pandemic, the Bank of Ghana will carefully remove the countercyclical measures in place and allow the financial system to function without the regulatory tolerance established due to the pandemic,” he said.
Speaking at this year’s University of Ghana alumni lecture series, Dr. Addison said that the financial sector requires constant regulatory and policy attention to identify and mitigate emerging risks and ensure financial stability.
He said the economic impact of the pandemic may result in an increased number of delinquent loans and some erosion of banks’ capital, adding that the Central Bank was focusing more on identifying early warning signs and initiating immediate corrective actions.
“Symptoms of a weaker bank are often poor asset quality, poor profitability, loss of capital, excessive leverage, excessive risk exposure, and poor governance, as well as liquidity problems.
“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 safeguard 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 robustness of the industry.
The government, prior to the pandemic, initiated and implemented policies that include the National Strategy for Development and Financial Inclusion, the Digital Financial Services Policy and the Cash-Lite Roadmap, with the general objective of deepening financial inclusion and accelerating the change to digital payments in the country. .
Dr. Addison noted that the momentous progress made in this area had significantly helped in the fight against the pandemic with exponential growth in the volumes and values of digital payment platforms in the country.
“The promotion of fintech had already been at the forefront of the Bank of Ghana’s agenda and we will continue to invest in supporting infrastructure, improving the regulatory environment and containing all associated risks to help achieve financial inclusion and financial transactions. digital. to support the national objective ”, assured the governor.
On 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 macroeconomic stability front.
He said that so far, the fiscal costs, in terms of the stimulus package implemented to moderate the adverse socioeconomic consequences on households and businesses, have been estimated at more than GH ¢ 11.2 billion.
“If the costs of the financial sector and the costs of the energy sector are added, the estimate of the financial burden of these three sources only rises to GH ¢ 24 billion.
“At half a year, it was estimated that the government paid GH ¢ 4.7 billion in payments for excess capacity in the energy sector. This has raised the debt-to-GDP ratio above the threshold for countries with market access, ”he said.
