International Monetary Fund endorses Bank of Ghana’s approach to banking sector reforms

According to the IMF, the country would have paid a costly price if the central bank had not intervened to reform the banking sector.

The Director of the African Department at the IMF, Mr Abebe Aemro Selassie said this at a news conference in Washington DC in the United States, as part of the ongoing IMF/World Bank Annual Meetings.

According to him, real-time supervision was required by the regulator to avoid a collapse of the financial sector.

“The alternative to not cleaning up the banking sector is even a bigger cost to the budget and to the economy as this can cause a disruption,” he said.

Although critics say the financial sector reform is too costly with its attendant jobs losses of an estimated 20,000 people in direct employment of the collapsed banks, 386 microfinance and microcredit companies and 23 savings and loans companies.

The Director of the African Department of the IMF said the consequences of not intervening would have been dire for the economy.

“We have seen what failings have done to the global economy and you don’t want that in your country,” he added.

Background

The Bank of Ghana has since 2017 embarked on an expansive clean-up of the financial sector that cost the economy close to GH¢14 billion.

The clean-up saw about 7 banks being collapsed.

23 savings and loans companies together with about 347 microfinance companies were also collapsed.

The World Bank has also supported the reform, calling it urgent.

Bank of Ghana Governor Dr Addison appointed as IMF/World Bank Board Chair

Meanwhile, the Governor of the Bank of Ghana (BoG), Dr Ernest Addison has been appointed to represent Ghana to Chair the Board of Governors of the Bretton Woods Institutions in 2020.

In a statement issued by the BoG, it explained that his selection was due to Ghana’s impressive achievements in macroeconomic stability achieved under the administration of President Akufo-Addo.

“Ghana was selected to chair the Board of Governors of the Bretton Woods Institution at the 2019 Annual Meetings Plenary of the International Monetary Fund (IMF) and the World Bank Group held on Friday, October 18, 2019.”

The statement further indicated that Dr Addison was appointed in recognition of his lead role in cleaning up the banking sector.