In a commendation of the Bank of Ghana’s (BoG) pivotal role in steering Ghana away from economic collapse, Vice President Dr. Mahamudu Bawumia hailed the central bank’s efforts in safeguarding financial stability and spearheading a remarkable fiscal resurgence.
The Vice President expressed gratitude for BoG’s responsible measures, particularly during critical moments that threatened the nation’s economic well-being.
“I must salute and give particular recognition to the Bank of Ghana, which has come under unfair criticism for taking the necessary measures that helped pull the economy back from the brink,” Dr. Bawumia emphasised, acknowledging the central bank’s crucial financial support to government during challenging periods.
Highlighting the temporary nature of financing provided by BoG, Dr. Bawumia stated: “The data available show that the financing provided to government by the Bank of Ghana was temporary”. He pointed out that the central bank had offered zero financing to government in five out of the last seven years, demonstrating a responsible approach to managing the nation’s finances.
Moreover, the Vice President applauded BoG’s resilience amid adversities such as the COVID-19 pandemic and global economic upheavals. He specifically commended the institution’s instrumental intervention during the dire straits of the COVID-19 pandemic – citing the GH¢3billion credit and stimulus package jointly executed with commercial banks. This intervention revitalised critical sectors like pharmaceuticals, hospitality and manufacturing, contributing to noticeable economic growth.
Dr. Bawumia also acknowledged the challenges faced by the banking industry upon government’s inception in 2017. With a sector marred by distress and teetering financial institutions, radical measures were imperative to prevent a sector-wide collapse.
The BoG’s interventions, supported by a government allocation of GH¢21billion, he said, successfully rescued 4.6 million depositors and revitalised the sector; thus, establishing a more robust financial landscape.
Amid recent global crises, including the Russia-Ukraine conflict and COVID-19 pandemic, the BoG’s role in restoring macroeconomic stability has been paramount. Notably, inflation rates have significantly decreased, dropping from 54 percent in December 2022 to 23.2 percent in December 2023. This, coupled with sustained exchange rate stability, underscores the effectiveness of BoG’s strategies in navigating turbulent times.
Despite challenges posed by the Domestic Debt Exchange Programme (DDEP), BoG reassured of its commitment to policy solvency – emphasising a focus on managing inflation and ensuring financial stability. The losses experienced by BoG were attributed to the domestic debt exchange, along with losses from the quantitative easing programme and interest rate changes.
Furthermore, the collaboration between BoG and the Ministry of Finance was highlighted as a pivotal partnership in crafting policies that bolster Ghana’s economic resilience. Prudential data showcased the domestic financial sector’s stability, revealing resilient bank profitability and robust capital adequacy ratios, indicative of its soundness amid turbulent global conditions.
As Ghana navigates economic challenges, the commendation from Vice President Dr. Mahamudu Bawumia underscores BoG’s instrumental role in safeguarding financial stability and contributing to the nation’s economic revival. The central bank’s strategic interventions and collaborations have proven crucial in steering Ghana away from the brink and fostering a resilient economic landscape.