$600m IMF money boosts international reserves to $5.7bn
The first tranche of $600 million out of the $3billion IMF support has boosted Ghana’s gross international reserves pushing it to $5.7 billion as of May 19, 2023, the Governor of the Bank Ghana, Dr Ernest Addison, has stated.
The US$600 million is the equivalent to 2.6 months of import cover.
The first tranche of the money hit the accounts of the BoG last week following the approval of Ghana’s Programme by the Executive Board of the Fund.
Addressing the media at the Monetary Policy Committee press conference, Dr Addison said although the money was meant for budget support, it would help the country in meeting its foreign liquidity needs, and help anchor both inflation and exchange rate outlook.
“We are going to credit the government with the cedi equivalent of $600 million to support the execution of the budget but obviously the BoG will benefit from the foreign exchange,” he stated.
The governor noted that gross International Reserves, excluding oil funds, encumbered and pledged assets, stood at $1.4 billion, while net international reserves as of March 2023 stood at $2.1 billion.
Banks record losses
Dr Addison also pointed out that banks recorded total losses of GH¢8 billion in the 2022 financial year.
He said most banks reported significant losses on the back of the mark-to-market valuation losses on their respective holdings in Government of Ghana bonds following the implementation of the DDEP.
He said other losses were due to higher impairments on loans and rising operating costs.
“The main profitability indicators, namely, return-on- assets and return-on-equity all turned negative in 2022 because of the industry’s loss position.
“The 2022 audited financial statements of banks also pointed to some impairments in capital levels, although most banks posted Capital Adequacy Ratios (CAR) above the 10 per cent regulatory minimum at end-December 2022,” he said.
The governor said data for the first four months of this year, show some turnaround in the banking sector’s performance following the conclusion of the DDEP, and following consensus reached among stakeholders on the treatment of losses arising from same.
He said banks continued to rebalance their portfolios in response to the impact of the DDEP on their balance sheet shifting away from medium-to-long term investments to short term investments and increases in new loans.
“In general, the banks returned to making profits in the first four months of 2023, broadly reflecting higher operating income.
“Loan loss provisions also increased relative to a year ago, due to the pickup in credit growth and elevated credit risks,” he stated.
Policy rate maintained
The BoG maintained its policy rate at 29.5 per cent.
Although inflation has seen a decline since the beginning of the year, the central bank maintained the rate due to global underlining inflationary uncertainties.
The policy rate is of keen interest to businesses, signals the rate at which the Central Bank will lend to commercial banks.
It also subsequently influences average lending rates on loans to individuals and businesses.