A Member of Parliament’s Finance Committee, Isaac Adongo has said the banking sector will suffer a massive hit due to the impact of the Coronavirus.
According to him, the situation in the sector will be aggravated for an industry that is still reeling under the effects of the clean-up.
Speaking after receiving the northern excellence award, the Bolgatanga Central MP, called on the Central Bank to be honest about the true state of the sector.
“When you collapse all of these [financial institutions], including fund management companies and you are now standing on only banks, what it means is that apart from the big corporates, the rest down the line do not get funding to run their business. It is as simple as that so we now have a financial sector that has been decimated and standing on one weak leg and that weak leg is a vulnerable banking sector. Coronavirus, as we see today, is going to hit our banks very strongly.”
“For those of you who have read Bank of Ghana’s own publications, you will see the dishonesty even in the publications because Bank of Ghana will tell you that the banks are making so much profit and they will tell you non-performing loans are declining. If non-performing loans are declining because you are making recoveries, there should be one impact. The impact should be that the monies that are non-performing were written off so if you collect them immediately capital should go up of our banking sector. How come you are making more profit? You are recovering of the loans that you wrote off and you are restating those loans in your capital and your capital is going down.”
Economic impact of COVID-19
The government is to meet and engage with the Association of Ghana Industries as part measures to cushion the economy against the expected impact of the coronavirus pandemic.
In his engagement with Parliament, the Finance Minister also noted that the government will rely on a mix of funds from the World Bank, the International Monetary Fund and withdrawals from the Stabilisation Fund to finance the budgetary gap expected to be created by the fiscal impact of the novel coronavirus pandemic.
This is needed because receipts from the petroleum industry, revenue from the tourism and aviation industries among others, have been projected to suffer a massive hit.
Also today, the Bank of Ghana’s Monetary Policy Committee will be meeting to assess the possible impact of the coronavirus pandemic on the domestic economy.
This is to enable the regulator to take the necessary steps to mitigate its impact and ensure financial and economic stability.
Last week, President Nana Akufo-Addo assured that the government was taking steps to handle any adverse impacts the global outbreak of the novel coronavirus could have on the country’s economic fortunes.
He said the state has engaged some relevant industry players to produce inputs needed to tackle the possible spread of the virus into Ghana.
“Government is analyzing the potential impact on our economy to the virus and will trigger the relevant response to minimize it. We have begun to engage the domestic pharmaceutical industry to assist in producing as much of the logistics to prevent and combat the virus as it is possible under the circumstances,” the President said.