BoG prepares to unwind some countercyclical measures
By Elorm Desewu
The governor of the Bank of Ghana, Dr Ernest Addison has
disclosed that the bank would carefully unwind some countercyclical measures
implemented to return the macroeconomic environment to the pre-COVID path and
allow the financial system to function without the regulatory forbearance to
support Ghana’s beyond Aid Agenda.
According to Dr Addison, the bank would also continue to
implement sound policy measures aimed at restoring confidence and preserving
stability of the Ghanaian economy.
“The Bank’s response to the ongoing COVID-19 pandemic is
further demonstration of its constant adaptation to the needs of the economy,
while seeking to maintain price stability and financial stability.
As central bank and banking sector regulator, the Bank of Ghana
has responded to the unprecedented economic impacts of the pandemic with a
number of policy and regulatory interventions including a reduction in its
monetary policy rate, reduction of reserve requirements for banks and
specialized deposit-taking institutions, reduction in the capital conservation
buffer maintained by banks, reduction in provisioning requirements for certain
categories of loans, and the purchase of Government bonds to support economic
recovery efforts”, he said.
These interventions have released liquidity in the banking
system which has allowed banks to restructure existing loans and grant new ones
to better support their clients. The Bank of Ghana’s ability to respond is a
function of the policy space that was created prior to the pandemic, due to
effective monetary policy and regulatory measures.
Ghana’s economy has been
severely impacted by the pandemic, as economic activities slowed down
significantly, and impacted negatively on individuals and businesses.
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