Governor of the Bank of Ghana, Dr Ernest Addision, has said that the decision by government to provide funding to pay off depositors and former employees of the defunct financial institutions, came at great cost to the national budget.

According to him, the central bank has provided significant financial relief to several thousands of individuals, households, and small businesses, and has helped to keep the financial system stable.

He said this when President Akufo-Addo paid a working visit to the central bank on Tuesday August 25.

Dr Addison said “The successful launch of the Ghana Deposit Protection Scheme in November 2019 under the auspices of the Bank of Ghana to help protect the savings of small depositors, further promotes confidence in the banking system.

“We continue to remain vigilant in our role as supervisor of the banking system, and through the instrumentality of the Financial Stability Council, which His Excellency established by Executive Instrument in December 2018, we will continue to work with other financial sector regulators to ensure a stable financial system that supports Ghana’s transformational socio-economic development agenda.”

He added “Your Excellency, the Bank of Ghana, over the last three and half years, has played a critical role in the government’s transformation agenda. Through reforms that were effectively coordinated with the fiscal authorities, macroeconomic stability was re-established following the significant imbalances at the end of 2016. Prior to the onset of the COVID-19 pandemic, the Ghanaian economic was once again classified among the fastest growing economies in the world, under your leadership. Growth averaged [7] percent; inflation was reduced significantly and maintained in single digits and well within the Banks target range, and exchange rate stability was well anchored. In fact, the economy had all the ingredients for broad-based inclusive growth.

“And these efforts were rewarded with Ghana’s first ratings upgrade, in 10 years, by Fitch global ratings agency from B- to a B with a positive outlook. Your Excellency, your support to the Bank during the reforms in the banking sector cannot be over emphasized.

“Your clear leadership and understanding of the role of the financial sector in the government’s transformation agenda, gave the leadership of the Bank the confidence and courage to embark on the comprehensive banking sector reforms over the last three years, which saw an increase in the minimum capital requirements, clean-up of the financial sector by the revocation of licenses of weak and insolvent institutions, and a revamp of the regulatory framework to stabilise and strengthen the sector.

“The clean-up has resulted in a stable financial sector with fewer banks and Specialized Deposit-Taking Institutions (SDIs) that are well capitalised, liquid, and solvent, and better able to support our nation’s economic growth agenda. These efforts helped to earn the Bank international acclaim as the Central Bank of the Year in 2019. By the end of 2019, all the financial sector soundness indicators showed strong improvements as capital adequacy ratio, profitability, and liquidity levels increased significantly while non-performing loans declined.

“Your Excellency, Government’s decision to provide funding to pay off depositors and former employees of the defunct financial institutions, came at great cost to the national budget, but has provided significant financial relief to several thousands of individuals, households, and small businesses, and has helped to keep the financial system stable. The successful launch of the Ghana Deposit Protection Scheme in November 2019 under the auspices of the Bank of Ghana to help the protect the savings of small depositors, further promotes confidence in the banking system.

“We continue to remain vigilant in our role as supervisor of the banking system, and through the instrumentality of the Financial Stability Council, which His Excellency established by Executive Instrument in December 2018, we will continue to work with other financial sector regulators to ensure a stable financial system that supports Ghana’s transformational socio-economic development agenda.

“Your Excellency, all across the globe, the COVID-19 pandemic has taken a toll on human lives, abruptly halted the steady growth recovery in advanced economies, and heightened economic uncertainty in emerging and developing countries. The disruptions to global supply chains have been unprecedented. In response to the economic fallout of the pandemic, policymakers have embarked on extensive measures to support health institutions, households, and businesses. Fiscal and monetary policy frameworks have been recalibrated to support growth and minimize the impact of COVID-19 on job losses and poverty.

“In Ghana, our economy has been severely impacted by the pandemic, as economic activities slowed down significantly, and impacted negatively on individuals and businesses. However, once again, your able leadership and globally acclaimed response to the pandemic is beginning to yield results. Economic activity which dipped significantly during the peak of the lockdown, is already beginning to pick up as monitored by the Bank’s updated Composite Index of Economic Activity.”