It explained: "Short-term vulnerabilities have risen significantly, amid high fiscal and current account deficits.
"The international reserve position has weakened alongside mounting public debt. High interest rates, and a depreciating currency have begun to weaken private sector activity, and spreads on
The IMF Staff Report is conducted as part of Article IV Consultation. The latest report is based on information available to the team at the time of discussions. The IMF mission team was led by
Following estimated GDP growth of 5½ percent in 2013, Staff projects a further deceleration to 4¾ percent in 2014. Driven by the depreciation and administered price increases, inflation reached 13½ percent at end 2013 and 14½ percent in March. Monetary policy was tightened, as the fiscal consolidation target was missed.
"Despite significant policy efforts, the 2013 fiscal (cash) deficit reached an estimated 10.9 percent of GDP, versus a target of 9 percent. In the absence of additional measures, the 2014 deficit is projected at 10¼ percent of GDP, with consolidation made more difficult by slower growth. To address rising inflation, the monetary policy rate was raised to 18 percent, and reserve requirements were tightened. Current vulnerabilities put
"The government's objectives of economic diversification, shared growth and job creation, and macroeconomic stability rely on the reallocation of resources from current to capital spending. Yet, high twin deficits and large interest payments on rising public debt are crowding out priority expenditure and private sector activity," she observed.
Madam Daseking recommended: "Macroeconomic stability will need to be restored to preserve a positive medium-term outlook. The financial sector is adequately capitalised and liquid, but increasing exposures will need to be monitored closely."
Stress tests conducted by the Bank of
According to the BoG, total assets of banks operating in
The Governor of the BoG, Dr. Henry Kofi Wampah, explained that the growth in assets was mainly funded by deposits, which recorded an annual growth of 29 percent to
They based their argument on the 7.4% growth of the economy, as well as the flamboyant profits being made by banks operating in the country. But, renowned economist Dr. Mahamudu Bawumia disagreed with the assertion that because the banks were making profits, the economy was doing well.
"As you can see, many small and medium enterprises (SMEs) are dying because of the current economic challenges. So, it is wrong to say that all is well with the economy," he added. Also, the banks recently complained that the intervention measures being implemented by the BoG to halt the rapid depreciation of the Ghanaian Cedi had worsened their plights.
A paper presented by the Executive Head of
The local banks, The Chronicle learnt, also lose a lot of revenue after pre-financing the export of goods and services for their clientele, without any benefit when their clientele refuse to collect and repatriate in full the proceeds of their exports to their local banks within 60 days of shipment, as required by the
"A lot of the exports in the country, most of the times, are pre-financed. When they do the export, the proceeds don't come to the country. This is impacting negatively on our revenue," noted
On its return to
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