Macroeconomic stability must be preserved- Dr Bawumia

Accra, Jan. 23, GNA- Dr Mahamudu Bawumia, Deputy Governor of Bank of Ghana, on Tuesday said the attainment of macroeconomic stability must not be taken for granted, but rather be preserved because that was what had brought the country this far.

He said macroeconomic stability had brought a lot of benefits especially in the financial sector, making the banking landscape more competitive with increased intermediation and improved loan quality.

Speaking at the launch of the sixth Ghana Banking Award

in Accra, Dr Bawumia attributed the myriad of reforms in the

financial sector in addressing asymmetric information to the

conductive microeconomic environment of the country. He said asymmetric information such as those involving

credit information, trust, address of the borrower, was a

major obstacle to lending that reforms such as the passage of

the credit-reporting bill, asking banks to publish bank charges

among other would address. Dr Bawumia said other reforms introduced by the Bank

included, the abolition of the secondary reserve requirement,

non-resident participation in domestic government securities,

foreign exchange bill, the new payment system and licensing

of new banks. He explained that the recent announcement of the

re-denomination of the cedi was part of the major

programme to reform the financial system to inject efficiency

in the overall payment structure of the economy. Dr Bawumia said Banks credit to Gross Domestic Product

(GDP) grew from 4.7 per cent in 1990 to 18.4 per cent in

2005, whilst loan deposit ratio was 50.1 per cent in 2002 as

against 66 per cent in 2006. He also said net foreign currency asset to shareholders

funds was negative 9.4 per cent in 2000 as against 43.4 per

cent on 2006. Dr Bawumia said the country also witnessed an opening

access to a wider segment of the population, which saw

banks branch network increasing form 259 in 2003 to 377 in

2005. He said there was the need to stimulate debate over how

banks could create social and environmental values without

sacrificing profitability. Dr Bawumia also said it was important to engender

competition and efficiency among banks, adding "Banks of

Ghana has undertaking various reforms to support a

competitive banking system. "In context of all these reforms, banks will need to reinvent

themselves in this new conductive but challenging

environment." Mr Saied Fakhry, Chairman of INTERPLAST Company,

manufactures of plastic products, said statistics from the Bank

of Ghana and other international quarters, clearly suggested

that the banking sector in country was indeed lubricating

Ghana's economy with lots of promising prospects. He said the future of banking in Ghana was bright and if

the introduction of assorted Automated Teller Machines and

networking of bank branches among others were any thing to

go by then the country was on the world map of banking. Mr Afotey Odarteifio, Executive Secretary of the Corporate

Initiative Ghana (CIG), organisers of the Award, said this year

over 4,000 respondents would be interviewed for both retail

and corporate users of banking services. He said 20 out of the 24 banks in the country would

compete for the 14 categories of awards, explaining that the

last two Fidelity and Inter-Continental banks would be

exempted because they have not operated for a full year. The banking award was instituted with the goal to create

a platform for the contributions of banks to be recognised as

well stimulate a healthy competition among financial

institutions, leading to improvement in financial products.