The International Monetary Fund (IMF) Executive Board has applauded the clean-up of Ghana’s banking sector to make it more resilient.
In a statement after the seventh and eighth reviews under the Extended Credit Facility (ECF) support arrangement for the country, the Board said the completion of the financial sector clean-up, as planned, would support the provision of adequate and affordable credit to the economy.
“The authorities deserve praise for strengthening the banking sector and for resolving nine banks. Completing the financial sector clean-up, as planned, will support the provision of adequate and affordable credit to the economy.”
The Bank of Ghana, in 2017, began a comprehensive reform exercise in the banking sector with the objective of cleaning it up and strengthening the regulatory and supervisory framework, to make the sector robust.
It also increased the minimum capital requirement to 400 million cedis.
The Central Bank in the process revoked the licences of seven insolvent banks.
The completion of the reviews under the ECF supported arrangement will make available about US$185.2 million to the country.
The Board additionally approved the request for a waiver of the non-observance of a few programme targets.
Ghana’s three-year arrangement was approved on April 3, 2015 for about US$925.9 million or 180 per cent of quota at the time of approval of the arrangement.
It was extended for another year on August 30, 2017 and is going to end on April 2, 2019.
The arrangement aimed to restore debt sustainability and macroeconomic stability to foster a return to high growth and job creation, while protecting social spending.
“The Fund congratulates the authorities for successfully completing the ECF supported programme and stands ready to support Ghana in its quest for economic prosperity,” said the statement.
The government had achieved significant macroeconomic gains over the course of the ECF supported programme, with rising growth, single digit inflation, fiscal consolidation, and banking sector clean-up.
It said continued macroeconomic adjustment should underpin these improvements, as the 2020 elections approached and called for sustained fiscal discipline to reduce financing needs and anchor debt dynamics.