Dr. Ernest Addison, Governor of the Bank of Ghana (BOG) has stated that majority of the loans restructured by Commercial banks (24.5%) as part of efforts to mitigate the impact of the pandemic on businesses went to actors in the manufacturing sector. According to him, loan restructuring and repayment moratoria were part of reliefs that Commercial banks provided to firms, especially for those in the worst-hit sectors.

The BOG Boss hinted that the total loans restructured amounted to about GH¢1.5 billion. He highlighted three major sectors that benefited from the loan restructuring. Apart from manufacturing, the Service Sector received 24.3 percent of the total loans restructured. Another area that benefited from the loan restructuring was the Transport, Storage and Communication with a share of 11.5 percent.

Also, the Governor noted that the Bank of Ghana responded swiftly to complement government’s COVID-relief measures. He indicated that the bank responded with “a raft of policy and regulatory measures to loosen financing conditions, ease liquidity pressures, and keep supply of credit to support critical sectors of the economy”.

Effects of the policy measures

Furthermore, Dr. Addison noted that the country has made a lot of gains from the policies introduced to contain the effects of the pandemic. According to him, due to these policies, the Ghanaian economy has performed far better than its peers. He added that economic activity is rebounding faster than “we observe with our peers”.

“These timely fiscal and monetary policy responses helped avert a very sharp contraction of the economy and spurred a faster recovery in the domestic economy”.

He cited an expansion in the Bank’s Composite Index of Economic Activity as it rose to 26.8 percent year-on-year growth in March 2021. Moreover, he indicated that the IHS Markit Ghana Purchasers Managers Index also improved to 52 in April 2021, up from 51.7 in March. The Purchasers Managers Index gauges the rate of inventory accumulation by managers of private sector firms and measures dynamics in economic activity.

Still on the recent state of the economy, the BOG Boss indicated that inflation has now declined from the double digits to 7.5 percent in May 2021. This means that inflation is back to pre-COVID levels and within the medium-term target band of 8±2 percent.

Also, he noted that average bank lending rates have trended down from a high of 26.2 percent in December 2017 to 20.9 percent in May 2021. Another important thing he highlighted was the Bank’s decision to cut the Policy Rate by 100 basis points to 13.5 percent. The BOG Boss said, “the lower policy rate is expected to trigger further downward adjustments in interest rates more broadly”.

Governor’s response to Parliament

Dr. Addison also responded to the Bank’s inability to honor an invitation by Parliament to clarify issues on the financial sector clean up exercise. The Governor stated that “running to Parliament to seek redress for the revocation of an institution’s license, is not one of the processes laid down under law”. He noted that those who feel aggrieved by a license revocation by the Bank of Ghana should follow the right processes.

As a result, he pleaded with the Law Making Body to allow the pending legal processes to take their course.

“There are already a number of actions filed in court and at arbitration by the same persons who run to Parliament for cover, and the Bank of Ghana’s simple response to Parliament is respectfully to allow the pending legal processes to run their course”.