Banks in better shape after BoG clean-up – Ken Ofori-Atta

The Minister of Finance, Mr Ken Ofori-Atta, has stated that the clean-up in the banking sector embarked upon by the central bank last year has put banks in a better shape than they were two years ago.

Delivering a keynote address at an economic forum organised by the Danquah Institute in Accra yesterday, Mr Ofori-Atta stated that but for that bold decision by the government, the distressed banks could have collapsed with deposits belonging to more than 15 million Ghanaians.

“Today, we can say with confidence that our banks are in much better shape than they were yesterday (two or three years ago). They are better capitalised with more robust governance structures, portfolios much safer for depositors, broad liquid assets of up to GH¢68 billion by February this year, as against GH¢43 billion in 2016.”

“Growth in non-performing loans (NPLs) has shrunk to 14.6 per cent (as of February 2019) and credit to the private sector has increased,” the finance minister said.

Mr Ofori-Atta said the government was mindful of the concerns that depositors went through last year as the central bank embarked on the radical clean-up of the banking sector.

He said the exercise cost the taxpayer about GH¢13 billion which could have been used to fix more roads, build more hospitals and schools.

President’s commitment

Mr Ofori-Atta said upon assuming office, President Nana Addo Dankwa Akufo-Addo decided that he was going to confront the harsh truth of the situation of distressed banks.

He said the livelihoods of millions of depositors were at stake as the banking sector of the economy headed for imminent collapse.

“We could not do what others did by pretending that all is well. We could not stand by and watch a few people enrich themselves at the expense of over 15 million hardworking Ghanaian depositors who had saved for a rainy day. So we tackled it. Our decision to go ahead with the clean-up was a difficult one and we brazed ourselves for another bumpy ride, but we have pulled through with your understanding and patience,” he said.

The forum was held on the theme: “Bridging the Gap between the Formal and Informal Economy: The Role of Domestic Revenue Mobilisation in an Era of Ghana Beyond Aid.”

Economy in shape

Touching on the broader economy, Mr Ofori-Atta said the government was on course as it had taken measures to fix the broken economy that it inherited, saying “the broken economy is on the mend.”

For instance, he said the government had reduced the stifling deficit from 7.3 per cent of gross domestic product (GDP) in 2016 to 4.2 per cent in 2018, reduced inflation from 15.4 per cent to single digit and successfully exited the International Monetary Fund (IMF) bailout programme.

Mr Ofori-Atta stated that the IMF predicted that Ghana would be the fastest growing economy in the world this year at 8.8 per cent.

“We are indeed on course. Stay the course with us; it may be bumpy today but we will make the economy work again,” he added.

Mr Ofori-Atta said the next phase of the development agenda was focused on industrialisation and changing the structure of the economy.

Consequently, he said the government was investing in Planting for Food and Jobs; Planting for Export and Rural Development; the One district, One factory; setting up the developing authorities and revamping the collapsed railway sector to ease movement of goods and services.

Mr Ofori-Atta said one could easily be misled that Ghana was worst off today than it was two or three years ago when one listened to some commentators in the media.

“The Ghana of yesterday did not see the planned transformation of the railway sector. We no longer have to import plantain from next door, thanks to Planting for Food and Jobs. The banking sector is more robust today than it was yesterday. Today half a million Ghanaians renew their National Health Insurance Scheme (NHIS) cards from the comfort of their homes and receive health treatment with their cards, which was not the case yesterday. We are by no means out of the woods yet, as many of us struggle to make ends meet, but the economy is in a healthier shape today than it was yesterday.

“It was only yesterday that workers and businesses were brought to their knees by ‘dumsor’ and killer tariffs. If there is something that the President is committed to, it is broad-based sustainable progress,” he said.

Mr Ofori-Atta said the Danquah-Busia-Dombo tradition had ruled the country for less than 13 years in total in the 62 years journey of the country, but its contributions had impacted the lives of people, starting from K. A. Busia through to John Agyekum Kufuor and now President Akufo-Addo.

He said President Akufo-Addo was committed to taking Ghana beyond aid and urged the people to show commitment towards the attainment of that agenda.

Tax compliance

Mr Ofori-Atta urged Ghanaians to show more commitment to nation building by honouring their tax obligations since tax revenues were needed to support development projects.

“Why do we complain of bad roads and other public services when we do not pay our taxes?” he asked and indicated that taxpayers also expected that their taxes would not be wasted through corruption.