Ghana's Extended Credit Facility (ECF) program, which concluded in July 2026, successfully achieved macroeconomic stabilization through coordinated fiscal and monetary policies, including inflation reduction to 3.4%, debt restructuring, and banking sector reforms. The IMF transitioned to a Policy Coordination Instrument (PCI) to maintain reform momentum without financial disbursements, focusing on structural reforms like private sector participation in energy revenue collection, tax base expansion, and state-owned enterprise governance. The program's success demonstrates that good policies with international support can help countries achieve debt sustainability and economic resilience, though challenges remain including potential fiscal slippages during elections and external commodity price volatility.
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as well and we're discussing the challenges and the problems and the progress of under the ECF arrangement.
This mission right now is a very complex one. We combine three objectives in one.
>> First of all, it's the last ECF last review of ECF arrangement. Second is the article for consultations. It's an opportunity for us to step back a little bit and discuss the medium-term challenges of the country. And the third one is actually a new type of engagement going forward. I'm sure we'll talk about that.
>> So was these mission engagement just locked in the office with those technical engagement and presentations or you also had time to move out a little bit to to see things for yourself. I mean a lot of things have been said about this economy. You wanted to meet the people on the ground again to aid your reports that you're putting together. Absolutely. So during this mission what we had a chance to do is to actually visit the cocoa farm. You know that uh coke sector is a part important part of our program without actually going to the farm without actually seeing how cocoa grows and talking to people who do that and understanding their problems very it's very difficult for us to help the government to design the solutions going forward. We also had an opportunity to talk to the people in the energy sector. We visited one of the hydro power stations and discussed what the investments needed in order to build the infrastructure for the uh demand for energy which is robustly growing in Ghana. So we have had quite quite a few opportunities also visited gold refinery. Gold sector is critically important. So we had an opportunity to touch a little bit the gold itself too.
So I mean doc I was just trying to get some some clarity from you as in for you how this on ground engagement was very important in the reflections and the report that your staff or the MF staff is putting together that you take it to the board.
>> Absolutely. Because uh when we come with advice the countries uh on the policy to address the challenges it has and to design these policies is one thing but actually to implement them is a very different thing and for us to be able to design policy which are implementable on the ground you really need to talk to the people of the country to understand what are the constraints sometimes it's a cultural constraints political constraints and also understand what do the ordinary Ganaians think about the what is the feasible way forward >> I mean I I I knew that this program was supposed to end in May and then I was um explained to that there's supposed to be some technical extension because a lot of things go through I mean when the staff is on the ground it takes some time to put together the report go around all the department even getting a date for the board meeting and all the rest as we speak today help me out with some one-on-one education >> has Ghana's extended credit facility program has it ended?
>> So what happened during this mission and what we have announced just literally a couple hours ago is a staff level agreement on the final six ECF review.
That means that my team and beginning authorities have reached an understanding on the policies which are needed to complete this review. The next step for us will be to go back to the headquarters, prepare a staff report with a lot of analytical documents attached to that and then present this staff report to the IMF executive board.
Uh we hope to do that on July 27th and with that the board will approve last dispersement and VCF arrangement and with that the program will be formally over.
>> So again help me out. So this program will be over in July this year.
>> Yes. So we you're working with July 27 that is the date tentative.
>> Um reaching the staff level agreement is quite critical in getting the board and going to the board. All other things being equal, have we met all the requirements? Have there been any prior actions or you think that when we get that July 27th dates do the presentation this program will be approved at the board?
>> This is our objective. So we want to present a very strong case on behalf of the Ghanaian authorities, Ganian people to the IMF executive board. So we will be reporting on all the commitments which have been undertaken by the authorities and the progress upon them.
So while during this mission we have assessed progress and certain things have been implemented, others are a little bit still in process. We do expect but that by the end of the program by the July 27th all commitments will be fully implemented and it will be very strong case. So we're confident that the board will be very supportive of uh completion of BCF.
>> The economist will say all other things being equal if we should go to the board on July 27th when will be the the final trench the amount that is going to come in and when would that also hit Bank of Ghana's account or government's account?
>> Almost next day. So this is a the moment the board approves it. I get a pay slip.
I sign it and immediately the dispersed and hitting the bank of Ghana.
>> How much are we looking at for this last branch of this?
>> I believe it's around $380 million US.
>> Is there any proactions that this government needs to work on before July 27?
>> Yes, there will be three prior actions.
I would not want to go into details of that but ultimately the prior actions will be in the area of the tax administration uh area of the uh reducing the quasi fiscal risk coming from the gold domestic gold purchase program and a few other areas as well.
>> So I mean let's look at some of the things that came up the energy sector. I know it's quite took much of your time.
What are some of the concerns that the fund has with the energy sector? So the energy sector is a very complex uh task for the government. So what has been achieved so far is to stabilize the sector and uh improve the payment discipline within the sector. There are many different actors within the sector.
There is upstream downstream and you know with the shocks within the sector propagate very quickly. So unless you resolve issues in at all these stages the sector will be still vulnerable to external shocks. But what has happened so far is that the payment discipline has been improved. ECG revenue collection has improved dramatically compared with the 2024 year and we continue growing. We see that the tariffs have been regularly adjusted, sometimes up, sometimes down, but that's in line with the cost structure going forward. And we see that the cost structure of producing electricity has changed too to make it less expensive with more use of gas versus uh oil products. And with that the the liquidity generated by these reforms was sufficient with some government support to actually start repaying the legacy areas to all the different IPs in the sector >> that provides the liquidity for them allows them to do more investment more electricity and the overall sector becomes more robust. But going forward the main uh challenge is to actually make sure that uh the sector itself is done in especially at the distribution level more efficiently and for that we be we highly recommend to accelerate reforms of private sector participation >> and and you think that the energy sector reforms what has taken place so far is not complete without the privatization of ECG >> not privatization I I said private sector participation this very different from privatization. So certain functions of uh uh collection of v revenues improving efficiency that will be delegated to private actors through competitive tenders and that typically improves the efficiency of the sector quite significantly based on our experience.
>> So if I get the clarity from when it comes to the revenue collection the fund advocates for an active private sector participation.
>> Exactly.
>> Do you think that we are committed doing this? Oh, absolutely. We sense very strong commitment. The challenges I'm describing to you are not news to your government. We fully understand that and they understand that what has been achieved so far is the stabilization of the sector. putting that on sustainable uh basis going forward requires additional reforms including private sector participation what we discussed >> and you you think that I I know that for a program like this you also look at uh the social cohesion and then the the feedback and all the rest and the pulse of the the the the the public as well.
Do you think that it it is something that the the workers the public would welcome in terms of the private sector participation when it comes to the revenue collection? I believe so because in the end of the day it's not only revenue collection there are many areas within we sector where the private sector can play a significant role but ultimately the objective of that is to reduce the cost of producing electricity and with that that means that the terrorists what ordinary Ghanaians will be paying for electricity will be lower and energy is the critical element for economic growth with cheaper and more affordable energy Ganaian economy will be able to grow faster will create more employment so I would expect that people will support this type of Is the fund satisfied with the issue about how the debt in the sector is being restructured or you think that there is still more tough measures that government needs to undertake? So what the current government has done it actively engaged the IPS independent power producers and did a full review of the debt outstanding accumulated over time and this debt has been indeed restructured.
So the burden of this debt has been reduced based on the agreement that going forward the government will be very disciplined in terms of servicing this debt going forward and so far we have seen quite significant payments being made both uh before the end of the last year two payments have been made and additional payments are upcoming very soon as well.
>> We are very actively engaged with uh IPS themselves and we have a lot of discussions. So already during the previous review when we had the meeting with them when I summarized the findings of the meeting as okay well so carefully we can claim that some progress has been made. I was interrupted and I was asked to state that no substantial progress has been made >> on on the fiscal side revenue has always been our challenge from your assessment. Are we getting there in terms of making that critical progress in matching revenue with the current standing of this economy? I are expending.
>> George, you're touching on a very important point. This is a critical question to ask. Let me to answer this question. Let me step back a little bit.
Three years back. When we designed this program, the intention of fiscal consolidation was that this program will be consolidated and that will be reduced mainly due the to the revenue mobilization. So that the revenues will be measures will be implemented and will help to reduce the uh deficit going forward and reduce the debt going forward. Now fast forward three years, we're in the end of the program. Looking back at what has been achieved, indeed we do see that fiscal consolidation has been quite successful.
But the structure that was far from what was expected. Expansion consolidation was predominantly expenditure with some contributions from revenue measures but not as much as was hoped for. That means that you know there are important questions to ask about sustainability with adjustment. So going forward to reduce these risks ultimately what Ghana needs to do is to focus on uh strong domestic revenue mobilization. That's very important because that's ultimately in the uncertain current environment is the most reliable source of finding large development needs of the country.
>> Revenue mobilization sometimes will come in the form of efficiency in the collections and sometimes some may even push for sometimes reviewing the tax rate. Has government demonstrated that much commitment in dealing with those challenges when it comes to the revenue, the inefficiencies, the loopholes and where it matters that people have to pay the right level of taxation, they are willing to bite the bullet to do that.
>> So I think you're absolutely right that there are different ways to raise domestic revenues. Certainly for Ghana, we would not advocate increasing the tax rates. We believe that the tax rates are already fairly high. So there's no need to necessarily review them with a view to increase but the tax base should be definitely expanded. Right now the tax to GDP ratio for Ghana is around 15% of GDP. For comparable countries of your income level it should be above 20%. So clearly the taxes are collected from a very narrowly defined base. Of course there are also significant gaps from tax administration point of view. So those who are supposed to be paying are not paying because of the weak compliance.
So certainly these are be areas which where the efforts need to be focusing going forward and we certainly see that the government is very much aware of that and progress has been made.
>> Uh are we fully satisfied? I think uh you know we need to do more. Mr. When Ghana signed up through this program, one of the major pillars of the extended credit facility was bringing debt to sustainable levels and that is very critical.
Now that we are on that path to end this program, do you think that one of this core focus of this program is B method?
We are on that path to reach debt sustainability.
The short answer is yes and faster than what we expected. We expected that uh the program will bring Ghana at moderator of the distress already by 2028.
>> We reached uh this level already last year when in 2025 we saw that the mechanical signals coming out of our the sustainability analysis were producing moderate risk of that distress rating.
IMF being IMF always cautious and prudent. We apply judgment to keep Ghana at high risk of that distress uh rating but uh this is the final review of ECF and we are quite hopeful that with the completion of the review we'll be able to upgrade Ghana >> and will will we see the fund very soon reviewer because in I remember I had an interaction with the country representative and he tried to explain to me how soon would the fund make the necessary recommendation to the board to take a second look at our classification. when it comes to the DSI assessment of country Ghana >> all of that will be happening around July 27th >> let me come to the monetary and the banking space and the bank of Ghana some will say has taken very some very very important action if you sit back and look at the monetary space how would you assess the bank of Ghana in terms of their contribution to the the the the the the inflation and the monetary decisions that they had to take to complement the fiscal program and even the ECF as well.
>> The role of Bank of Ghana is tremendous in the stabilization success. You have seen that inflation decelerated very rapidly in fact faster than what we expected as of end of April. Uh inflation was at 3.4%. This is I believe historically very low for Ghana and this is quite impressive. What was the ingredients of this success? First of all, you know, it was a very prudent mon monetary policy response. Bank of Ghana has uh increased policy rates to the level where it was sufficiently high to address the high inflation and with that it was also very careful in terms of sterilizing the liquidity which is being injected when the uh gold proceeds have been purchased. So keeping liquidity tight and with high interest rates inflation was decelerating very quickly and this is part of the success of the disinflationary trajectory. What also helped is actually the coordinated nature of the policy between monetary policy and the fiscal policy because at the same time the government was also tightening the fiscal belt and with fiscal consolidation and monetary policy restraints both policies were pushing in the same direction and cooling down the economy and that's what we see as at the historical level low inflation level.
Now of course exchange rate stabilization which is also another uh mandate for the for the bank of Ghana has also helped because sad was one of the best performing currencies last year with apprec significant appreciation that helped to reduce the prices of imported goods and therefore helped to reduce inflation.
>> I mean we are under some would say it is right to ask the mission chief this question. There are some who have argued that the Bank of Ghana was too aggressive in this stabilization program and we see the I mean you made uh your projections already before the results came out that resulted in these operational losses that they made. What is the fund is the fund worried about the numbers or it's about the end justifying the means. So first I would disagree with this view that the bank of Ghana was too aggressive. I think it was very prudent and the achievement is I think manifested in the outcomes and I think people on the ground actually recognize that. Second um there is cost of doing monetary policy and this is something what people need to understand. You know that the bank of Ghana 2025 financial statement was just published and it transparently presents the cost of doing policy with high inflation and high interest rate absorbing liquidity from the market is costly and that's what we see as reflected in the statement. Yes. So it did generate a some cost for the for the bank of Ghana but it was a necessary cost for the stabilization going forward. Let's come to again in the monetary space where and I would not mention the name because of confidentiality and also protecting the banking system. Government is supposed to take an action on a certain bank because of the contagion and the consent that you have with it.
Have you gotten that assurance from government that going forward that action will be taken on that bank or they are pushing a different means of resolving that bank?
Well, you didn't name the bank, so I'm not sure what exactly you're talking about, but I think let's step back and look what was an important objective for what was an important objective for the financial sector reforms.
>> The impact of domestic debt restructuring resulted in significant uh destruction of capital for domestic banking system. So many banks were under capitalized. What the authorities have done quite successful during the program bringing backs banks back to the full capital adequacy in line with the credential requirements that has been achieved almost for all the banks. There are a couple of banks remaining and we do expect that by the end of the program the banking sector will be robust >> and I I ask this question because that are you satisfied with the state of the banking sector even though there are one or two that may having some problems. Do you think that we need to fast track the reforms of the banking sector to make sure that every bank is healthy?
>> Well, absolutely the reforms need to be completed. That's how we see that the overall the strength of the banking sector has been improved drastically during the ECF arrangement. The few remaining blocks will complete this agenda going forward. But where we do see risk that NPLs are still fairly high especially among the stateowned banks and this need to be addressed going forward. Well, it's uh you know, okay, you know, for some of the loans being default, but when you see the ratios going up, this is non-performing loans ratio going up. This is something what we would like to be addressed by stronger supervisory action. This is something what we're working with with the authorities. Another since we're talking about the financial sector, another sector which needs to be addressed going forward is SDI, specialized deposit taking institutions.
And this is a sector where the future challenges need to be addressed. I know there will be more that will be coming up in your your staff report, but when I read the press release, I still see the the IMF had some problems with the gold sector and the Bank of Ghana exposure >> and you made your necessary assessment and the numbers in the P&L account has shown us you still have some concerns.
So we published in the fifth review staff report our assessment on the gold sector based on partial information. It generated quite a lively debate here in Ghana and this debate is actually very healthy. We were very happy to see that.
>> Are you worried?
>> Uh worried about debate. Absolutely not >> the level that it generated.
>> No, not really. We I would say we welcome this debate because transparency is very important >> and uh this transparency resulted in uh a lot of actions to be internalized and taken going forward as reforms. So what we have engaged with the both bank of Ghana and the ministry of finance now is the scope of the gold program and I think the debate is was missing a little bit uh that it's not black and white.
there are actually both benefits and the cost of this program. So in our engagement with the authorities what we're trying to discuss is how to maximize the benefits and reduce the costs how transparently reflect these costs. So our recommendation uh during the our discussions was that the costs need to be reduced. Right now the design of the program is such that it's a fairly costly program. So the authorities are taking actions to reduce the cost of that so that it's not a burden to the taxpayers of Ghana but also what we're discussing with the authorities is how to maximize the benefit and we're actually transparently reflect this program and this is the what we will publish in the upcoming staff report. Did you feel use my choice of words carefully vindicated when the account was published and showed the big bank of Ghana's exposure to the gold board and what the gold sector and its hit on the bank of Ghana?
>> I would not use the term vindicated. I think uh we rang the bell there. We saw the vulnerability. We pointed that out to the authorities. the authorities have taken actions to actually reduce its vulnerability.
>> You know that the bank of Ghana has sold some of its gold reserves uh in the end of 2025 and that was actually an action which we very much supported because by doing that what we did we reduced vulnerability of the balance sheet to the fluctuation in gold prices which is quite significant right now and also uh capitalized on gains through the valuation of the gold. So that was an inappropriate step which helped to reduce the cost of the taxpayers.
>> M Dr. Toy, I know time is not on your side but we will take a break and when we come back quickly we're going to wrap up this interview to get more the concerns about sustaining this momentum for you and again when I engage some IMF officials they talk about how the reforms have been moving very sharp.
They initially were surprised and also educate me on this instrument about PCI.
This is PM Express Business Edition engaging the mission chief for the International Monetary Fund Ghana program getting some understanding about sustaining the momentum and what is next for Ghana's program. Be right back after this break.
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Welcome back to PM Express Business Edition as we look at Ghana's program with the International Monetary Fund.
And now that we are ending, how do we sustain this momentum so that we don't end up going for a 18th program with the International Monetary Fund engaging the mission chief for Ghana, Dr. Arubian Atan. He's engaging me here on PM Express Business Edition. We heard the rumors then we saw government statement and then we saw the IMF statement.
Again, help me a dog. Normally when these programs mission chiefs mission program ends, it is the staff that issues or the IMF we saw government issuing a statement from the presidency and then the IMF issuing a statement.
Help me why? Well, it's actually a joint state statement, right? So, it's the joint discussion. The reform agenda is owned by the authorities. We're supporting that. And actually, I think we managed to issue both statements at the same time. Exactly. At the same time. So, it was not the government first and then us. It was happening at the same time. So and this is just kind of to communicate to the public about what the progress which has been made and the direction of our relationship going forward. What has happened is ultimately a major success of macroeconomic stabilization under the ECF but stabilization and resilience are two different things. So going forward we would like to work with the government to support them to strengthen resilience. this ECF program worked hard to reform certain things and structural reforms and all the rest. So if this program is ending and these structural reforms has indeed worked, some will say why the need for a successor program being this policy instrument is the fund itself when you accepted this request from government then worried that those reforms were actually not reforming the economy and the structures in the economy.
>> Actually the opposite quite the opposite. We welcome this request when the request came from our point of view.
PCI policy coordination instrument let's get used to the new abbreviation there is a very different type of engagement.
It's a new era of the relationship between the fund and Ghana. It has no money touched. So it's actually just a policy coordination uh framework through which we as the IMF are putting stamp of approval on the authorities reform agenda. So it's a it's a strong signal of commitment of the authorities to the reform agenda continue reform agenda which will entrench resilience. So stabilization was successful. Now deeper structural reforms are needed to actually entrench this stabilization into and converted into the resilience.
Or what would you say those who would argue that there are serious fears of fiscal slippages when this program is completed in July and August and that is why this thing is being accepted by the fund to to to bridge that gap.
>> Uh so first of all during the under VCF we have put sufficient safeguards into the public financial management framework of uh beginning in uh of Ghana. so that these type of slippages will be avoided going forward. So we are quite confident that within the central government this these safeguards will be quite effective helping the authorities to navigate this landscape without actually having the fiscal sleepages there. What we are concerned about is the fiscal risk outside of the central government. You know when we look at the analysis of the debt sustainability of Ghana much of slippages typically and much of accumulation of that happens outside of the central government it's materialization of the fiscal risk in the stateowned enterprises there is quasi fiscal activities which generate additional debt and then which results in additional debt burden on Ganian people and I think that's actually the next stage of our engagement together with the government we will be trying to mitigate and address these vulnerabilities going forward that ultimately requires stronger transparency around stateowned enterprises, stronger governance and mitigating understanding and mitigating fiscal risk coming from SOES.
>> Help me with some a policy um instrumentation >> instrument it's a non-financial uh uh program will come with some scrutiny.
What else is this instrument supposed to do for country Ghana when we exit this current ECF program? Just break it down and explain to me for those who would not say that oh ECF has failed. Ghana is signing up to another IMF program an 18th program.
Well, techn legally speaking, PCI is not a program. It's a technical assistance uh form. So, what we would say is that ECF has been successful and going forward Ghana is graduating from dependency on IMF financing but appreciates the engagement in and policy coordination with us and the format of this policy coordination is going to be done by the policy coordination instrument. It will have more or less the same structure as ECF arrangement.
It will have semiannual reviews. It will have some commitments. It will have uh not memorandum of economic financial policies. It will be called program statement. But there will be some report of the authorities to the IMF executive board on the reform commitments going forward. And with that we will be going to IMF executive board every six months and presenting and to the board and also to the general public publishing our reports about the progress being made and that is supposed to send a very strong signal to the markets to the capital markets investors in Ghana and the Ghanaian people but also development partners that the uh reforms are ongoing that the gains hard won by the ECF arrangement are not being wasted and that the policies are fundamentally strong with that that will catalyze additional financing and will help to uh address the development needs of Ghana.
>> Do you expect the market to respond positively to the because some of the the the gossips or the concerns when I was in Washington DC for some of these institutional investors was how do we sustain the gains when Ghana exits the program? Do you expect the market to respond to this? Not only I expect I already I'm seeing that already immediately the press conference we we just had with Minister Forson my phone started exploding because some of the investors who have my phone number started sending me text messages welcoming the news. They see it as a very positive signal. They see that as a commitment of the authorities to continue with reforms and this is well received by the market and ultimately will result in lower cost of borrowing for Ghana both domestically and externally. The ECF program worked hard to bring debt to sustainable levels.
With this ECF coming in, we would have an improved investment grade. The market is going to respond.
What would be the right time to go into the market or we should still wait a while and welcome the reforms to strongly stabilize things? Well, I believe that it's a southern decision.
So decision to go and borrow externally, it's the decision what the authorities need to make on their own. From what we discussed with them, we understand that in near term there are no plans of such nature. We do believe that the all the financing needs of the government going forward can be comfortably met by borrowing from domestic bond market. As you know just recently the government tapped the bond market first time since the that restructuring and while the placement was fairly small the yields were historically low. So it's a milestone for the country to reenter domestic bond market after the debt restructuring and we expect and we see that liquidity is there to sustain the financing needs of the government going forward in domestic currency which eliminates foreign currency risk. So um depending on the developments and de depending on the costs and the investor appetite the government may decide at some point to tap international capital markets as well but ultimately it's their decision and will be very supportive of that. Uh PCI is exactly the framework which will help them to actually mobilize financing from the capital markets either domestic or external.
um when when we are in the headquarters during the spring meetings or annual meetings and investors are all coming we are bombarded by a lot of requests to meet with investors it's typically you know I'm not exaggerating hundreds of people who come and want to talk to us about Ghana so there is appetite in exposure to Ghana there but ultimately that management is the sovereign choice of the country and it's up to the authorities to decide how to prudently do that >> we are just coming out of an ECF program this is um a technical assistance broker.
Do you think that government has the the muzzle to sustain because fiscal consolidation comes with its own stress and some if I can use the the correct expression or not using the red wrongly and overheating fiscal consolidation fatigue you know you have to stamp your feet down you you're checking all sectors checking revenue expenditure do you think there's the appetite and the muslin the strength to roll over in another program that kind of try to again re in spending.
>> This is a great question and uh it's important to understand that the fiscal consolidation together with that restructuring and other Putin policies has resulted in a significant improvement marked improvement in the debt trajectory. It's much stronger than what we expected when we designed BCF program. So ultimately this improvement with that trajectory generated new fiscal space. It's a technical term we use ultimately saying that the government doesn't need to be as tight as it used to be. And this was exactly the topic of our discussions when we designed the PCI together with the authorities here and we believe that there is quite significant fiscal space to be used in order to do strategic investments in strategic areas to stimulate private sector growth and employment. This is something what will be actually part of the PCI. So this fiscal austerity which was carried generated during the CF times generated gains which now will be felt by the Ganian people going forward. So fiscal prudency is still needed and therefore we need to be careful especially as I already mentioned about this potential fiscal risk outside of the central government. Some will say that the biggest test of the resilience of your program ECF and even the policy >> coordination instrument PCI >> PCI will be spending in an election year that would be just two years from now.
Are anybody making those assessions not well grounded because of the structural reform that has taken place in the economy over the years?
>> What you ask ultimately asking me is Ghana going to be Ghana again? Right.
So, uh this is also the question what we hear very often from the investors. Is this time different? And I'm not the right person to answer this question.
But let me share with you my personal countries you know.
>> So I think the lessons have been learned. The crisis of 2022 was so painful that uh the the the pain is real and it was internalized by the decision makers and this is what the vibe we're picking up from the authorities when we're discussing the policies going forward.
So certainly we do believe that the going forward uh fiscal prudency will be carefully implemented and we do believe that with a 36 month PCI which goes over the full political cycle of this government the policy will be well anchored.
>> There were lot of there were some I shouldn't use the word lot some Ghanaians who were skeptical when we signed up to the ECF program. Do you think that the numbers today should vindicate the success of this I am a program for the company Ghana?
>> I think that's the question for vegan people. I think people need decide by themselves.
>> Was the sacrifice worth it or not? We see that in macro numbers. We see that in stability which is entrenching putting stronger rules there. So we certainly believe if you ask us we believe that yes it was worth it and the progress is undeniable there but of course you know there is a difference between stability and robust growth and growing income there for individual people there and ultimately this is something what is a important lesson for the authorities going forward stability is important but generating growth generating employment generating uh good well-paying jobs for younger generation going forward is an important ingredient of social coherence and social coherence is critical for strong policies going forward and for economic resilience going forward for you what do you see as the the big threat to the PCI and even the bigger Ghanian economy as a whole because we've seen the externalities not being favorable but it hasn't been that bad for the economy.
What do you look out there and see as the biggest threat to the economy now that we've seen the stability?
>> I would mention three things perhaps.
One is complacency and that's probably the most important one. While stabilization is undeniable and the gains are quite significant, it's not the time to be complacent because as you mentioned rightly external environment is very difficult. what you Ghana has not experienced much of the spillovers from external environment yet mainly because of the structure of its exports.
Uh what is a very unsettle and difficult environment for many countries around the world including many of countries on African continent is actually positive terms of trade shock for Ghana because you're exporting raw commodities and gold in particular prices have increased quite significantly. So it was what we call a positive terms of trade shock which supported the expiries of Ghana but the commodity prices are very volatile and with unsettled geopolitical tension it's very hard to predict what can be happening. So it's very important to keep significant buffers going forward. So that that's that's that's the second most important uh risk factor which I would say and the third one I have already talked about that it's this contingent liabilities outside of the central government especially in the SOE sector. This is something which needs to be well internalized and then good governance and the fiscal transparency reforms of these stateowned enterprises need to be implemented going forward. When you look back and I know you you worked on several countries and I engaged some of your officials and were you surprised about the pace of reforms and how this program has performed over the years and even now that we are bringing an end to this ECF program.
>> Uh no I'm not surprised. We we're expecting that because we sense strong commitment strong political commitment to these reforms. It was not IMF imposed program. The program was homegrown and it was owned by the authorities and that's why there was strong province to be implemented and the strong ownership resulted in good outcomes and this is exactly what we're seeing there. So this is an expected outcome. We're quite pleased to see it.
>> I mean for you do you think that Ghana's success again should help challenge other countries who are going through the similar path? Absolutely. I think the lesson here is that good policies pay off.
>> So with strong policies, with some support from international community, any country can turn itself around. It's quite remarkable. We turn around in Ghana and three years after the major crisis we're sitting here and discussing a policy coordination instrument which is non-dispersing arrangement.
Ultimately, this ends the era of dependency of Ghana on MF financing.
Let's hope it's actually >> your final words to Ghanians. I mean were some who didn't think that we needed a program to stabilize things and again not your view but the number speaks for itself. As you wrap up on this discussions for you what do you talk onions?
>> My main main advice is stay the course.
>> Uh we know that uh the the landscape is turbulent. We know that there are significant risks there. It's going to be very very important to learn from the mistakes of your past and not to repeat the this boom bus cycle because of fiscal imprudency because of the accumulating uh debt not to find itself in another arrangement with IMF.
>> So let's hope that this time it is going to be different >> now the PCI program we might be seeing uh Dr. Toy back again in the country television program >> with pleasure. I appreciate your time so much and I look forward talking again to you in terms of uh the program and looking forward to see how things will stabilize. This is PM Express Business Edition engaging the mission chief for Ghana on Ghana's program and what are the challenges ahead and how things have stabilized and sustaining the momentum going for this SPM Express Business Edition. Have a great day.
Heat. Heat.
Welcome. Welcome back to the second part of PM Express Business Edition. You just heard the IMF mission chief, Dr. Rubinatian explaining issues about the IMF program. But welcome to the second part of PM Express Business Edition where I engaged I mean somebody in the banking industry. The Bank of Ghana has actually moved to maintain its policy rate at 14%. But what does this mean for interest rates going forward in the country? What about the issue about non-performing loans and several developments in the industry? Well, on PM Express business edition, my guest is the chief executive of the Ghana station of banks, Mr. John Iwa, to help us appreciate and understand the connections with all these things and what does it mean when it comes to this CRR being reviewed and what does it mean for lending and the cost of credit going forward. So well thank you so much and welcome to PM Express Business Solution.
I look at your Q1 numbers last year numbers. Am I right to say that indeed we have turned the corner. We are out of the woods and it is indeed a good time to be a commercial bank in this country.
Thank you very much. Um you know it's a it's a process. Uh you would you can never say that uh you've arrived. Um, of course, uh, we've seen significant progress. Uh, we have a banking system that is proving that, um, is resilient.
Um, it can withstand some of the shocks that we've gone through in the last couple of years. Um, and with the fact that, uh, present economic fundamentals are looking in the right direction. I I would say the banks are safely anchored and that we are poised for growth to support the economy and all the bankable projects that are available um um to us as secondary.
>> But am I fair to look at the Q1 numbers and indeed make that judgment that based on the numbers that has been put out but most of these commercial banks and if we're a layman who maybe want to just look at the the bottom line make that judgment that things are quite good for these commercial banks.
I don't know what you mean by good. You know banks, we are in a a business. Our number one asset is called risk assets. So um I'm very particular about the quality of the earnings and also where the earnings is coming from. And to the extent that banks are on year-on-year basis recording some growth, if you compare even the growth we are recording this year to the growth we made same period last year to the previous year, you'll find that it's a bit subdued which means that um banks are carefully still navigating the environment.
We wouldn't say that the stabilization we've recorded has started producing the growth we are anticipating and as banks we we we are the ones to anchor that and that perhaps you know our best years are ahead of us >> as we help individuals businesses and households you know with um the needed liquidity to propel growth um since we've had some form of stability um in the last couple of should I year months. Yeah.
>> Since you spoke about growth, stability in the economy, I mean just moving from our previous discussion as well. Just get your thought. I mean this current extended credit facility is coming to an end. All other things being equal in July this year based on what the IMF is saying. I mean going to this uh policy coordination instrument for you, you don't operate in space, you operate in this environment. What do you make of this development, the IMF program and the decision to get the successor program to kind of maintain the stability going forward?
>> Yeah. Um obviously um there's something different about this particular exit because we are more or less exiting the ECF >> and entering a PCI and um in that environment there's still some level of um third party oversight which unfortunately um has been something that I think we need more of um we do not appear to be you know of our own when we are left to to run our matters and uh we unfortunately you know perform better when we have other people sitting at the table. So the PCR gives us that comfort to some extent. A lot will still you know you know rely on on the uh should I say the discipline that as a the fiscal side in particular we would um would exercise going forward. 2027 election discussions will begin ticking and 2028 we you know history does not help us >> because of what we've gone through as a country before exiting the program and then a year or so we are entering another elections and then we just reverse everything. So this PCI gives particularly at a time when the country wants to go back to the international capital markets. Um we give that investor confidence that yes we are exiting but we still want some third party eyes on how we progress. The PCI still requires government you know to open itself up to some level of review.
um the IMF people come around you know occasionally to review our performance and then you know the report to be made public. So it's not just a a statement if we are not complying with the key requirements of the program potentially it will reflect in the report which potentially can also impact confidence in the international committee even local investor community as well. So it's in our interest all of us and that is what we have every day been hammering that our problem has never been when we are under program cuz when we are under program you know there are hooks and we are not just allowed to do the things that sometimes we really like to do. So it is when we are off the program that is when proper resilience is tested and um so far we do not have any cause to worry. the minister of finance you know has been saying the right words and you can see that he has significant control on the n government apparatus. Um the uh commitment authorization process that has been introduced is also one thing that can help with uh you know our drive towards not overburdening the government with liabilities that government may not even have sight of. So is is all together so far I think we have been in the in in the in the right books. We are just hopeful that we will continue on this trend and that we will not sacrifice our economic progress on the alter of elections or because IMF is not around.
>> Let's come to the monetary policy committee and the decisions that they took and then they hold in this key lending rate commercial banks as at 14%.
for you. Let me first get your thought as commercial banks. What do you make of this action and the reasons that the governor had to give for holding the rate and more time to review development in the global economy? Yeah, I mean um I think about two weeks ago I granted interview on your network and I clearly stated that the view of the banking industry is a hold and that um we hope that the MPC um would maybe just validate that and that's exactly what they've done. Why? Because we are still operating within the policy corridor of our inflation targets. Um we are even significantly outperforming our expectations. we said 8% plus or minus 2 inflation is our 3.4 for I mean so definitely we are within that corridor there is no need to constantly be tricking with that tool. Um, of course, um, the other decision of the MPC or should I say the central bank varying the cash reserve requirement is a matter that >> I'll be coming back to that but I to get your thought about what will be the implications on interest rates going forward because what will be the implication on interest rates?
>> Yeah. Um uh of course the Ghana reference rate which is the key determinant of interest rates is a the interplay of three rates. One of the rates is just holding firm. Um the last time um the the Ghana reference rate reduced from 0 um what 10.06 to 10.03.
It was not because policy rates has significantly changed but because the other rates also witnessed some significant movement. What we have seen now um even the last published policy 0 uh 10.03 03 clearly TB rate inched up and the policy rate was because it wasn't within the window of um um u releasing the policy rate and the lending rate rather the inter bank rate was the one that drove the Ghana reference rate down. So the implication uh would be that depending on how market sentiments move within this corridor uh we are going to maybe hover around where we are or depending on because TBT rate has started inching up on week on week basis though not much um depending on the direction of that travel uh we may see a marginal perhaps uptick um depending on market sentiments >> there are some who have said that the banks do not respond according ly but do you do you think that it's about appreciating all these dynamics because of that criticisms that they are not seeing the banks respond accordingly look at the the margin of reduction policy rate I mean real interest rates inflation and you look at your reference which is a benchmark and there's nothing to write home about >> I mean whoever says that is not following the data it's as simple as that we are becoming more or less like nor our um um employees within our work environment. No pay is enough for our our staff. I mean wherever you find yourself at Joy FM, you you always be asking for more. Where I work, I mean my people definitely will be asking for more everywhere. Even within government structures, people be asking for more.
So we do not think that even if interest rate is at 1%, people will not complain.
There will still be complaints. You understand? Because rates have declined.
from 35% at the height of all the troubles that we went through not too long ago and now we are talking about lower teens you know in a lot of instances even below 10 >> and if we are seeing we we still cannot see this decline you know I guess surprised I was pleasantly surprised hearing it from the president of the chamber of commerce >> CEO >> the CEO of the chamber of commerce that banks have not responded in tandem and you can see clearly if you plot the graphs you find that we have outperformed the policy rate when it comes to decline we have outperformed even TB rate when it comes to decline TB rate was upper 20s we are coming from 35% and now depending on your risk profile there are there are banks that are giving facilities at 10 9 11 we were nobody was thinking about this 2 years ago >> do you think that and there are some who have done I was trying to do some calculation myself.
It appears that this decision to hold the rate might affect certain people's push for us to have stayed within that single digit interest rate because if you look at the dynamics it appears that we will see an uptick maybe going up marginally than even coming down and the concern is that we were hoping that we could have stayed or even gone down further officially to that singledigit interest rate. I'm I'm not sure about us being fixated on a single digit single digit >> interest rate of lending.
>> No no it it does but we have to look at it from both ends. We are also in the same country where we are dealing with cities and you need to also maintain the value as a store of currency as a store of value. So we need to be careful to balance the act properly. I've always said that yes, lower inflation is very good. Uh currency stability is perfect, is excellent if we get this going into the long term or medium to long term.
But um and interest rate at where it is.
Yes. Um good for the growing community, good for market players, but let us not be too fixated on having rates so depressed that you know growth in the economy also becomes depressed. Are you worried about low interest rates?
>> I'm not. You know banks we all we the what we maintain is we always play in the middle. We don't make our money only on just the gross interest income is a net interest margin. That is where banks make their money and of course there there's been some shrinkage of margins but I'm not sure you've seen the results and banks are still showing a yearon-year growth. We need also to attract capital >> and um if you are in a significantly depressed environment um you should know that your attractiveness to the investor community both local and international may also be affected.
>> What is the average lending rate as we speak right now for the commercial banks that somebody likewamina who has a good credit history could enjoy from the commercial banks? We are seeing rates you know when you see the published one last year last April I believe or last month it was in the region of 16 but we have seen rates as low as I have seen offer letters to individual customers at 9 9.1 I have seen it it's not that I've heard I have seen offer letters and it is happening there are companies that are enjoying singledigit lending rate as we speak >> you see We are in a very difficult environment. When I say we, I'm talking about the community of banks. It's very difficult to publish what we give to say George Wafi in confidentiality. And so when people come on radio on social media and they say all kinds of the things that they say about rate, interest rate has not fallen in in line with market rate. All I say is um for those who matter in terms of when I say those who matter those who are really in the business of borrowing or lending they understand that rates have significantly declined from 35% we are talking about in some instances 9%.
Sec 12% at the moment or 13%. I mean I mean George ask yourself one and a half years ago or two years ago where where were we? So and nobody it's the same bankers. So when rates went to 35% it's the same bankers who you are seeing around who operated within that environment of 35%. And I kept saying that interest rate is not like your kett in your house where you pull and then you you you draw you know like that back and forth. It is a derivative of whatever circumstances the banks are operating in. So we all have to be interested in what government of Ghana is doing, what the bank of Ghana is doing, what the minister of finance and his team and all the other ministries are doing. We should all be interested in how the economy is run because it is when the economy is run properly that we get the transmission to the individual actors in that economy and and and every time we put the burden of interest rate on the banks as though banks just go and increase the interest rate. But it's the same bankers who are operating at 35% who are operating 8% 9%. Now >> when we come back we look at the CR the implications of this on total lending non-performing loans and some other development in the banking industry.
Be right back after this break.
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Welcome back to PM Express Business Edition. Let's look at the decision by the Monetary Policy Committee of the Bank of Ghana to hold the rate at 14% and what that means for you if you are currently servicing a loan or you intend to take one very soon. engaging the chief executive of the Ghana station of banks, Mr. John to get some understanding of this cash reserve ratio and just to do me a 101 here. I knew it was reviewed in the past. It has also been reviewed again by the bank of Ghana. Help me appreciate what the governor said when he says that this cash reserve ratio has been reviewed.
uh should I say it's is more or less a moving thing.
>> I I would have preferred that we allow the system to digest the decision but since it's a public um release um I just want to shed you know some light on it.
Um all the governor is saying is we used to have this dynamic cash reserve ratio where if you deposited dollar in your bank the bank will then place a certain percentage of it at the central bank is non earning >> is at zero interest and if you brought cities the the bank will put that percentage up to 25%. But it was currency for currency. And the governor reviewed and his team they reviewed and they decided that no that regime must change uh because it has implications on business. It has other implications that to their own assessment resulted in um their review. U and that is why we are a bit surprised that that review has been reviewed again and now we have gone back to single currency um um reserving which technically means that taking a lot more CDs from the banks >> for dollars and foreign currency that banks are actually not lending >> and we know that when that regime used to be there it resulted in some banks you know even some banks going to the extent of levying charges on dollar deposits >> because you have to cover the cost in one way or the other. The CD deposit will bring money as fixed deposit. I use it to cover somebody who brought me $1 million that I'm not able to lend and I'm not earning anything on it. So, it's a very dicey situation. We are not sure what has resulted in this. The first time it was done, the case we as banks made to the central bank at the time was that we are making the banking system pay for the cost of monetary policy.
>> But elsewhere, monetary policy decisions must transmit through the banks to the larger economies, not to sit on the bank's balance sheet and in our earnings. And that is where, you know, in our engagement, which has been very good. I mean I would say I give it to this governor and his team in their openness and we believe that as we engage them and dialogue a lot more on this potentially um um some other considerations may come to bear because it has implications. We are we are saying that we have stabilized as a as a as a an economy. The governor himself has said that and in after stability what do you want? You want growth >> and who do you need to give you that growth? It's the banks. So you cannot ask the banks to give more by taking more from them. Are you getting me? So we need the cities to lend and if the city is sitting at central bank earning zero then potentially we do not know and and we also believe in the ability of the central bank and their cap capacity or capabilities in terms of assessment of these variables. Uh but we had a politician um some not too long ago following the release of the central bank's results who was attributing a portion of the losses to the fact that that policy was reversed but we do not think the central bank could take policy decisions because the politician has said that but that is what since we announcement came that's what we have been hearing I do not think the governor will even like that so when we engage we would want the full you know open book so that we can all understand what else we can do together. You know we are a regulated highly regulated industry and we work with the central banks to to to do the work that we do and when it's announced we have a duty to comply but sometimes if you understand it properly then your compliance can be enhanced and we need them to listen to us have a listening ear like >> they've had in the past >> does it make it more expensive now for a commercial bank to hold FX now >> of Of course cost more >> of course I mean I don't want to go into the terrain where you are perhaps maybe your your thinking is going but it makes it more expensive for a commercial bank to attract forex um or what you call foreign currency into our operating infrastructure and um but we need that to also undertake certain activities and of course it also squeezes a lot more cities from the banks and you know our based currency is a is a city Ghana city and we need a lot more of it. We don't need less of it to do our intermediation. So when money is taken away from us in that manner um it it becomes a challenge. It becomes very worrying and that is why um we believe that um we need to take a second look at this >> in in one breath people celebrate CRR because of its impact that is the general school of thought and then what the textbook would tell us because of its impact on lending.
What could be the impact of this again on credit extension when it comes to the commercial bank? But again coming from the the back or the the school of thought or the argument that the banks are not lending but let me first get your thoughts about what this will also mean when it comes to fresh lending to the private sector. Yeah. Um two things.
First um it it will increase the cost of lending. Most definitely because if we believe in the funding structure of of a a typical bank, you take deposits and you lend that deposit. Now the the cost of that deposit is now up because you are having to commit a lot more of these expensive deposits.
you know committing them and and keeping at the central bank at zero interest when you are paying whatever interest you have agreed with the regulator um with the the depositor at the end of the day. So you bring your 100 Ghana to the bank, we pay you interest for 100 Ghana.
Meanwhile, we only have access to 80 Ghana of the money.
>> So the effective cost of your deposit is higher. So that is one leg. The other leg is it also sucks liquidity from the banking system in the manner that we do not think this we need at this time when after stability. We are all talking about growth but you know and you need uh credit you need liquidity to propel that growth and I'm not sure you want to achieve that by taking more uh liquidity from the banking system.
>> I'm here to do a proper go through of the summary of economic and financial data and forgive me even though I did a scan. Do you think that in terms of the upto-ate numbers there is still a concern about liquidity in terms of too much money out there even though there are some who have seen that whilst we've seen a spike of inflation let's still do some more mort and and and that could have influenced his action as well >> you see and and that is where as a country I think the discussion should move to because um yes monetary poly elsewhere where the economy is properly interconnected Ed the economic actors within the country are properly interconnected. When you touch interest rate or you touch something everything else is touched. We still have a significant part of our economy in the non informal sector. So in an attempt at using maybe the policy rate and the other monetary policy tools to correct some of the things that we are discussing inflation and you know whatever liquidity availability and the like we may unduly be overburdening the few who are within that formal sector and the banks are at the pinnacle of it and unfortunately we are not touching a lot of the liquidity which is potentially the ones driving um I mean the inflation or whatever uh um risk we are seeing in the in the country to date. If you go to all these mining zones and everything is cash based.
>> I mean the the the the middle man is paying cash to the miner. The miner is using the cash to buy food food stuff.
It is cashbased. That cash does not find its way properly within this uh architecture of juggling with rates and um taking money from the banks. It it it it doesn't it doesn't solve it. So we are overcompensating on one end because there's a shortfall on the other and that is what we saw in 2020 2021 2022 when we saw a lot of slippages on the fiscal side and then the central bank was very busy using monetary policy to to address um things that you know um um were you know balance sheet and mo mostly fiscal >> you know it's a balance sheet you cannot only use one leg to correct everything.
And that is why we believe that as banks sometimes uh the monetary policy actions unduly punish us because we find ourselves in the space where we are the face of the intervention and the transmission mechanism starts with us.
You say what are the commercial banks lending the growth in terms of your books or the the current environment? And I'll I'll ask you try and wrap up on this this I'll come to the NPL's issues. Are the banks lending terms of growth in your loan books to the private sector?
>> Yeah, banks are lending active >> compared to previously in terms of active growth in your lending. So far I have not come across um like or been in any meeting or come across you know a discussion wherever in our engagement with the banks where there's a discussion around squeezing credit. No way in an environment where rates have even dropped you need to increase your volumes in order to generate the same revenue that um you you generated the year before in in prior reporting period. So banks are actively lend lending. But the point is this banks don't lend in a vacuum. They lend because there's demand. So we need to also begin asking ourselves what why is the demand side also weak >> and try and find some solutions around the demand side. What you hear are you know people speaking on radio sentiments personal sentiments and more mostly hears say just like the interest rate you know hearing on radio that banks have you know don't reduce the interest rate look at where meanwhile the data doesn't >> the data I don't know I don't know where where that room is >> from 35% to u uh uh 11% 10% % and we are talking about room. Where is the room?
>> So it's not true that overall lending is declining because I mean the banks are a little bit more cautious.
>> Where else will you put where else will we put the money?
>> Treasury bills. Bank of Ghana bills.
>> You are saying you're saying bills. You are saying bills are quite high. You were quite heavy last year in terms of bills.
>> No no you see you need to when you see the omo >> it comes through. You say we are a transmission mechanism. You understand?
So if we talk about inflation fight >> and the central bank talks about oh we have our tools are working it's because the banks are helping >> with that transmission >> chose to lend than buy >> no but nobody put a gun against and nobody is also saying because of bills banks are not lending >> because lending rate is almost always higher than whatever you get on um investment other investment securities >> I think government securities or bank of Ghana bills. No, >> you always land with a premium >> but your exposure the data shows that is quite high and it means that something has to give.
>> So we need the other demand side to also come on board. We need bankable projects projects that banks can put the ammunition behind and fund banks will not you you hear on radio banks in fact Ghana is one of the few countries where banks actually actively advertise lending.
H we advertise.
This morning I heard banks on your channel advertising come for loan what else do you want that's there it's we cannot force demand you understand and at at the end of the day the money the banks are lending you know are people's money so the fact that maybe one or two people come and they don't get does not mean that the whole system is is >> accessing and I ask this question because this is not just a normal person or a friend that I engage when I engage someone in theation of Ghana industries when I give someone at the chamber of commerce and they talking about access to long-term funds more than 2 years 3 years now it's no longer even about the cost again but access is a huge challenge credit beyond 2 3 years 4 years is difficult that should worry me if AGI if chamber of commerce are saying that now it's about access to credit >> access has always being a problem and it's not a new uh phenomenon particularly to long-term credit >> because we do not necessarily have long-term funds banks I mean you tell me who goes to the bank and deposit money and say I'm signing a three-year fix deposit bank of Ghana says match your assets with your liabilities so the loans you are giving you must have the deposit base with the comparable maturity to enable you do that what the banks are not Even the little the banks have been able to do you know have been around what we call the the core component of this volatile deposit base.
>> You know we they use modeling to assess how much of this demand deposit that I can lend you know over maybe 3 years to 5 years banks are giving facilities I've seen seven years in in this country. But the point is unlike other countries or other economies that we like to compare ourselves a lot with even when pension pension funds place funds with the bank they place with a ten of 12 12 years 6 months.
>> So how how is the bank going to look at a pension funds funding base of maybe 10 million and give a loan of 10 million for 5 years or seven years. So there's a larger a bigger discussion that all of us must must give and must all consider and again because of the should I say the risk profile we've we we've operated in an environment that has more or less normalized default >> you know if 20% of all borrowings in the country will go bad >> then that's what happen is what is happening >> I thought the governor talked about the fact that there has been some there's been And what will that be the impact on?
>> There's been some improvement. We are coming from 21% I think we are you know sub 18 or 18 around.
>> That's good looking at where we are coming from.
>> Yeah. But I mean that is not their low no not much has happened within the structural problem that we have with the judiciary. We had a meeting with the chief justice and and his team you know to bring this to their attention and to place it very squarely that is is becoming a hindrance to lend them more or less because when I go to through the court system and a bank is getting tossed from court one to court two court 3 when we can just go through some requirements within the borrowers and lenders act and get resolution it it it affects the next lending You understand the land issues we have in this country.
So there are a lot of structural problems.
>> If you are lending for 10 years and you need a coverage for 10 years in terms of collateral >> really you will find you go underneath this chamber of commerce and the AGR you find that even the collateral support they don't have. But there's a regulatory requirement. If I want to lend and call it a secured lending, the the collateral must be at least 120% of the value of the lending. It's not a bank's imposition.
>> Are you getting me?
>> So what does the new and as we try what does the new non-performing loans laws that has come in contributed to this?
And also does it place more extra restriction on you that again fresh lending will be a challenge?
>> No. um that rather um should push banks to lend more. It's a it's a you know it's proportion >> so you can either reduce your NPS by actually reducing the non-performing side or you can reduce your NPLs by growing the base >> and that is where we have a bit of a challenge as an industry that we think the timing is too >> aggressive. um by end of June we should be trending to a certain percentage and by end of December we should be around the 10% corridor that the central bank is asking us we are still engaging and I don't want to throw out you know the kind of discussions we are having with the central bank out there when it is still undergoing >> um some some some review but >> but that will have an impact on lending that >> um if and um any kind of impact it will rather be a positive impact on lending because you need to lend more in order to dilute the the non-performing.
>> We've seen some recent pressure on the Ghana city and yesterday at the NBC the governor spoke about the fact that the positioning of the bank now is reserve accumulation. I've seen some auction results from the banks where the banks are demanding more FX and the demand is not being met. I mean are you worried because of one the implications on the demand pressures and the performance of the Ghana when BG said that our reserves is 14.4 but we being heavy on res accumulation.
>> Yeah I mean I don't think he said the discussion is one or the other you know the central bank is also very concerned about volatility. So we are very sure that in kind of shoring up the reserve they their their hand in the market should also keep at pace. I believe what you you wanted to say was we we are not losing sight >> of the fact that we need to build the necessary buffers in our foreign reserves in order to have the foundation to properly um support our currency. So it's not one or the or the other and I believe that we should understand the the governor in that light.
>> Should the Bank of Ghana act their support for the market in terms of intermediation?
>> Um we've seen some sustained pressure based on let's look at even real demand trade finance dividend. The thing is we not those who are >> we have not as a country we have never ever been able to meet our demand FX demand. We've always run short. The discussion should be are we seeing an uptick in the short in the short the gap are we seeing an increasing trend of um inability to meet. Just not too long ago the governor had mentioned that they even rather spending more inter like um um intervening more I just they call it um um through the auction process. So I'm not sure there's been any significant departure and we should also sometimes look at the timing. Um around this time bank companies have published and then we find dividend payment and other offshore settlements and you you know we've seen you know in a trend analysis you will find that in the year before maybe around this time >> um um rates you know had some tension.
So I do not think we should be more or less um worried too much. Um we we are still within demands being met.
>> We are still we we are of course I mean um we always ask ask for more if you go for an auction for $100 million and you get $50 million. You wish you had 100 million. So of course um as banks we are working on the central bank to to do to do more. And one of the things that we are doing is working again the central bank to formalize a lot of the eics sources so that it doesn't have to be central banks big hand always in the market as you try and wrap up on this discussion two quick questions fraud in the banking sector are the commercial banks doing more are they issuing more commitment to this because some are saying that it's become too many and if I look at bank of Ghana support on Ford and where sometimes you've identified complicent in terms of some individuals within the banks that gives people a lot of worry.
>> Yeah, I mean you're absolutely right. Um it is one big fight that as an industry we have confronted with and the good thing is that we have taken the bull by the horn. So um in the coming days you'll be hearing from us. actually we are launching tomorrow and I'm sure you should bring your people here to cover the event for us because we are launching a huge fraud awareness campaign. We we believe that yes banks are doing a lot but we need to do more but we also need our customers to also take certain precautionary measures around you know emerging typology for typology. So we use the campaign to educate, to inform and also to get people to be more conscious a lot more about personal financial security. Um not sharing their passwords, not responding to requests from supposed bank which you know has a foster at the other end and always to validate and authenticate if they have to share anything because banks do not ask we have the data already. So we will not be asking customers to divulge anything that is called personal to you and that is what we are using the fraud campaign to do and it's going to be a massive campaign and we are hopeful that our media partners will help us to more or less spread this message to everyone in se all the languages that are spoken in this country. What do you think that within internally with respect taking an internal action as well being hard on some of these recalcitrant stuff could also help because some of the things that happen you cannot devoid that I nobody knows or sorry if my choice that a few people might know that I see with a bank A now I have somebody call me that a bank A this branch is doing XYZ give me this information obviously some people wouldn't see is not somebody just fishing or guessing. Do you think that they should be maybe be more hard internally dealing with some of these individuals?
>> I can tell you there is no sector or industry that penalizes it people more than the bank banking system. What we have not done well is how do we popularize this to let the general public know you know because we are also more or less a trust >> um you know uh industry you don't want always to be out there oh we've we've sucked this person because of fraud s and that is the kind of communication that we at the association we want to work with the banks to to lead >> because we are not a mainstream bank so we use our reach to popularize these kind of decisions and the consequences that bank staff have gone to. There are bank staff who are in jail because of fraud and whenever there is fraud and there's an internal involvement. The focus rather even is on the internal than the external because you don't want one of our own to be the ones at the center of a fraudulent event. So part of this campaign there's an internal staff angle to it. All of them are going to go through certification and we are working with the HR community of our of our of our industry to have more or less a name and shame kind of approach. If the bank doesn't want to do it, we the association we can lead that once they give us the information, the staff, the extended the nature of the fraud. We we may not even name the bank but we just name and share and let people know that there are people who are paying the price and that we are not shielding any kind of foster within our network.
>> Well, funny there been some development in the industry and help me out this whole thing about compound interest in an interest calculation. Just give me some education.
>> A simple put interest is compounded annually.
That is why when you go to a bank say PA 10% PA per annual. So you compound interest per finished unless you sign a contract with your bank that says maybe interest should be paid in June and the contract ends in June and you are not able to meet it. Of course, the bank will then continue charging you the interest. But compounding of interest can never be per month. I mean, I don't I can't even understand people debating this on social media on I don't know whether is a court or wherever, but interest is compounded peranom. This is where we have to draw the curt. This has been PM Express Business talking about the implications of the policy rate hold on the banking industry. My name is George AF. Have a great day. Heat.
Heat.
Hello. Good evening and welcome to the 1800.
>> It's few hours to the 6:00 p.m. bulletin on campus radio at the University of Media Arts and Communication. Sak Baloo goes over her scripts one more time before entering the studio.
>> Coming to you live from our studio here at 32nd G Abdul Nassau Avenue. The final year journalism student has done this many times on campus, but every bulletin still demands preparation, focus, and confidence.
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