Dr. Ernest Addison, Governor of the Bank of Ghana (BoG), provided reassurance that the banking sector maintains stability, despite heightened credit risks, during the 117th Monetary Policy Committee (MPC) press conference in Accra on Monday, March 25.
He highlighted that banks’ liquidity and profitability have continued to strengthen, with over half of the 23 banks being fully capitalized and not requiring recapitalization. Dr. Addison noted that these banks have met more than two-thirds of the required recapitalization within a year as of the end of 2023.
Regarding the policy rate, the MPC decided to maintain it at 29%. Dr. Addison explained that although there was a slight drop in the inflation rate in February, further monitoring of trends was deemed necessary. He attributed the fast-paced expenditures to the clearance of arrears in the energy sector but anticipated revenue flows to improve in March as the tax return deadline in April approaches.
In terms of the domestic economy, Dr. Addison highlighted that the growth outlook for 2023 exceeded targets, with the fourth quarter Gross Domestic Product (GDP) growth at 3.8%, driven by all sectors. The real Composite Index of Economic Activity (CIEA) for January 2024 recorded an annual growth of 3.5%, affirming a rebound in economic activity compared to the contraction observed in 2023.
Key growth drivers included port activity, imports, industrial electricity consumption, domestic VAT, and tourist arrivals. Dr. Addison noted improvements in sentiments, as reflected in the PMI, indicating an uptick in business purchasing activity and new orders. However, private sector credit remained sluggish due to banks’ risk aversion amidst weakened asset quality.
