BoG governor assures liquidity of banks amid IMF bailout

BoG governor assures liquidity of banks amid IMF bailout
Dr Ernest Addison

The governor of the Bank of Ghana (BoG), Dr Ernest Addison, has assured that the banking sector in Ghana is liquid and can withstand any shocks.

He said that the BoG is prepared to offer liquidity support to any bank that may face challenges in the future.

He made these remarks at a joint press conference with the IMF in Wahsintong, which he joined virtually from Accra.

Dr Addison said: “The banking sector in Ghana is liquid at the moment. [But] the BoG stands ready to provide liquidity to any bank that has future liquidity issues.”

The IMF’s mission chief for Ghana, Stéphane Roudet, said that the $3 billion bailout that the IMF has approved for Ghana will lead to reforms in the energy and cocoa sectors.

He also said that the programme will aim to restore macroeconomic stability, foster inclusive growth, enhance resilience to shocks, and boost private sector investments and international reserves.

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He said: “There will be reforms in the energy and cocoa sectors.”

“It will be restoring macroeconomic stability, for higher and more inclusive growth. It has reforms that will make the economy more resilient and likely to withstand shock in the future.”

The finance minister of Ghana, Ken Ofori-Atta, expressed his gratitude to the IMF for the support.

He said: “We are already seeing relative stability in the currency and inflation and revitalizing our economy. Government with support from the IMF and collective effort with Ghanaians will work through our current challenges and emerge stronger.”

The IMF’s board unanimously approved Ghana’s bailout on Wednesday, May 17 at a meeting in Washington after Ghana secured the Paris Club financing assurance on Friday, May 12.

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A press release issued by the Paris Club on Friday, May 12 said: “The creditor committee stresses that the Ghanaian authorities are expected to seek from all private creditors and other official bilateral creditors debt treatments on terms at least as favorable as those being considered by the creditor committee, in line with the comparability of treatment principle.

As a result, it added: “The creditor committee urges private creditors and other official bilateral creditors to commit without delay to negotiate with Ghana such debt treatments that are crucial to ensure the full effectiveness of the debt treatment for Ghana under the Common Framework.”

A creditor committee for Ghana has also been established by countries with eligible claims to facilitate the implementation of the resolution. The creditor committee is expected to be co-chaired by China and France.

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“The creditor committee examined the macroeconomic and financial situation of Ghana, including its long-term debt sustainability, and its formal request for a debt treatment under the “Common Framework for Debt Treatments beyond the DSSI” endorsed under the Saudi G20 Presidency in November 2020, which was also endorsed by the Paris Club.”

“The creditor committee supports Ghana’s envisaged IMF upper credit tranche (UCT) program and its swift adoption by the IMF Executive Board to address Ghana’s urgent financing needs.

“The creditor committee encourages Multilateral Development Banks (MDBs) to maximize their support for Ghana to meet its long-term financial needs,” the press release added.

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