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Photo Courtesy: Abod |
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GHANA’S BANKING INDUSTRY MUST BE
PROTECTED
By Gideon Sackitey, Ghanadot
Accra Dec.18, Ghanadot.com - Ghana’s banking industry
is a public good that must be protected and regulated to
meet the desired standards of a vibrant and sustainable
market, Dr Paul Acquah, Governor of the Bank of Ghana (BoG)
has said in Accra, where he announced a new Prime Rate of
12.5 per cent determined by the Monetary Policy Committee of
the Central Bank.
He said the financial market of every country must be
regulated to have entry and exit points and should be
capable of deciding for itself what it wants and how much of
it can sustain.
“There must be a clear path of orderly growth and stability,
even in the face of consolidation of any kind.”
The Governor was commenting on the kind of signals Ghanaian
market regulators could be sending to international
financiers and investors following the blockage of a
takeover deal by the First City Monument Bank of Nigeria on
Cal Bank of Ghana Limited.
He said the Bank had placed a ceiling on the number of Banks
operating in the country from Nigeria, indicating that it
was important not to allow the Ghanaian market to be taken
over by banks from one country only
since the consequences can be disastrous
in the event of a fold up by banks
in that particular country.
He was speaking at the end of three-days of MPC Meeting in
Accra, saying that the decision to reduce the Prime Rate
from 14.5 per cent to 12.5 per cent was partly due to
developments in the real sector of the economy which has
shown expansion.
Explaining, he said the Bank’s Composite Index of Economic
Activity increased 3.3 per cent in the fourth quarter and
11.5 per cent in real terms by year on year or above the
trend growth of 10.1 per cent.
Dr Acquah put the cedi as stable against the US dollar
during the year; cumulatively, the cedi depreciated against
the dollar by 1.1 per cent and depreciated more against the
Euro by 12.2 per cent 14.2 per cent against the Pound
Sterling for the period January to November 2006.
“This compared with a depreciation of 0.6 per cent against
the US dollar and appreciations of 14.3 per cent and 10.5
percent against the US dollar and appreciations of 14.3 per
cent and 10.5 per cent respectively against the Euro and the
Pound Sterling in the same period a year earlier.”
In trade weighted terms, the cedi appreciated cumulatively
by 1.1 per cent for the January to October, 2006 and by 5.2
per cent in foreign exchange weighted terms.
He said the Bank’s survey of business and Consumer
Confidence also showed significant increases in both
business and consumer confidence in the economy and
prospects for improved macroeconomic conditions for 2007.
Looking ahead, he said the prospects are for the
continuation of the current macroeconomic performance with
improved prospects notably the re-denomination of the cedi
next year.
“The exercise would provide gains and should underscore
policy commitment to macro-stability, adding that, “ the
downside risks associated with oil prices remain but appear
diminished and seem well balanced and neutral for prices at
the current at the range of 60-65 dollars per barrel.”
He said the undercurrents of demands for appropriate wage
and living conditions and cost measures from load-shedding
and energy sector would need to be managed to preserve
competitiveness and minimize output loss.
Governor Acquah said the overall stance of the 2007
government budget reduction while geared to sustaining the
current pace of GDP growth, envisages reduction in the
public domestic/GDP ratio thus maintaining the fiscal anchor
for stability that would support continued progress towards
low stable inflation and growth.
Dr Acquah in giving the rational behind the reduction in the
Prime Rate said strong domestic demand reflected in strong
import growth.
“Total imports for the period January to October 2006
amounted to 5, 414.80 million dollars representing a 27.2
per cent increase compared with a total import bill of
4,255.76 million dollars for the same period in 2005.”
He said non-oil imports amounted to 4,202.86 million, an
increase of 23.0 per cent over the 3,416.30 million recorded
for the same period in 2005.
Consumer goods imports were estimated at 966.3 million
dollars, an increase of 17 per cent over the previous years’
level of 826.1 million dollars while capital goods fixed at
873.5 million dollars of 22 per cent increase over that of
2005.
Intermediate goods imports are estimated to be 3,213.0
million dollars compared with 2,404.0 million in 2005, of
which fuel lubricants accounted for 1,164.47 million dollars
and 839.48 million dollars in 2006 and 2005 respectively,
with the increase reflecting mostly the rise in oil prices
on the international market.
Dr Acquah said these developments has resulted in a trade
deficit of 1,871.56 million for the period up to October
2006, but the current account turned in a reduced deficit of
45.6 million dollars, compared with a deficit of 581.7
million recorded in 2005.
Overall balance of payments recorded a deficit of 111.04
million compared with a deficit of 195.29 million dollars
for the corresponding period of 2005 bolstered by the
seasonal inflows of cocoa proceeds.
Private inward remittances, a notable feature in the
government’s financial statements for January- October 2006
4.79 billion dollars. It is attributable to NGO’s,
Embassies, Service Providers and individuals channeled
through the banks and finance companies.
The figure is 25.9 per cent increase over those recorded for
the corresponding period of 2005.
Gross international reserves, according to the governor
increased by 324.33 million dollars to 2,107.02 million at
end of October 2006, exceeding the 2 billion dollar mark for
the first time, enough to cover 3.5 months of imports of
goods and services.
Ghanadot.com
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