President Nana Akufo-Addo has said his government has been able to reduce inflation to 7.9 per cent from the 15 per cent he inherited from the Mahama administration in 2017.
Justifying the banking and financial sector clean-up exercise after swearing in the new board of directors of the Bank of Ghana at the Jubilee House on Friday, 20 August 2021, the president remarked: “Probably the most difficult problem my government met when coming into office, was the state of the banking and financial sector”.
According to him, “many of our banks were in distress and have been kept on unsustainable and artificial life support by the central bank”.
“The supervisory agencies, were, unfortunately, not performing their duties which allowed weak governance and management structures of many banks, to fester”, he observed.
In the president’s estimation, “we were in a desperate situation and urgent, radical measures had to be taken to prevent the collapse of the entire financial and banking sector with consequences too dire to contemplate”.
“The Bank of Ghana, under a new leadership, intervened and restored sanity to the sector and in the process, saved the banks involved and the funds of some 4.6 million depositors”, President Akufo-Addo said.
Also, he said the government found some GHS21 billion to fund the clean-up exercise, “which has enabled a more robust financial and banking services sector to emerge the better to finance the rapid development of our nation”.
Adducing further evidence to back his assertion that the clean-up exercise has been helpful to the economy, the president quoted a comment made on the subject by the World Bank’s Country Director for Ghana, Liberia and Sierra Leone, Mr Pierre Laporte, in a one-on-one interview granted to the Class Morning Show on Class91.3 FM by saying: “A few days ago, the World Bank Country Director for Ghana, Liberia and Sierra Leone, had this to say about the banking sector clean-up: ‘It was important that this clean-up happened. Maybe the details could have been done differently. I won’t get into that but under direction and what happened, it was important because you cannot have a financial sector that is plagued by non-performing banks, non-performing loans, institutions that have poor governance, institutions that cannot honour people’s desire to have their funds back’”.
The president stressed that his predecessor left him a broken economy which he has been able to salvage.
“As I intimated earlier, my government inherited, in 2017, an economy riddled with macroeconomic imbalances and a financial sector that was at the tipping point of collapse but dressed up in camouflage by unsustainable daily support from the central bank”, he noted.
“We had to introduce, immediately, reforms and corrective measures to address the imbalances and restore stability”, the president said.
He pointed out: “Very quickly, with the support of the Bank of Ghana, macroeconomic stability was restored, which provided a sound environment to underpin the government’s economic diversification and transformation process”.
Today, he noted, “there’s clear evidence that inflation has been well-contained”.
The previous board of the Bank of Ghana, the president recalled, was inaugurated in August 2017, “at a time when inflation was some 12 per cent down from the 15 per cent inherited from the Mahama era”.
“And four years down the line, inflation has been well-managed and has dropped to as low as 8 per cent at the end of the second quarter of the year”, the president observed.
He said “inflation is currently at 7.9 per cent at the end of July 2021 within the target band of the Bank of Ghana”.
He continued: “I’m very encouraged by the many corporate governance measures that have been put in place by the Bank of Ghana to mitigate future bank failures and ensure that we have a strong banking sector that can drive the transformation agenda of the government”.
“Indeed, recent policy measures introduced by the Bank, are commendable and align with the overall objective of moving Ghana to a situation beyond aid”.