Banking sector clean-up: Government fully supports BoG, SEC – Bawumia

Vice President Dr Mahamudu Bawumia has described the financial sector clean-up by the Bank of Ghana (BoG) and the Security and Exchange Commission (SEC) as an inevitable exercise that will eventually position the country on a solid foundation for economic growth.

He said the government fully supports the BoG, SEC, and all other stakeholders involved in the clean-up, adding that, “by the time the different clean-up activities are complete, we would have positioned this country on a solid foundation for economic growth”.

Vice President Bawumia said this when he launched the guidelines for the Global Master Repurchase Agreement (GMRA)/Ghana Fixed Income Market (GFIM) for Repurchase Agreements in Ghana.

The guidelines are expected to regulate the trading of fixed income assets such as government and corporate bonds on the secondary market, including repos.

Vice President Bawumia noted that one of the core themes underlying the government’s growth and development agenda is to build a stable macro-economic environment and a vibrant financial sector.

He said the government has, over the past three years, demonstrated its ability to build and maintain a stable macro-economic environment by adhering to strong fiscal discipline.

“Government will continue to work to safeguard the successes to date and further improve the country’s macro-economic outlook.”

“By investing nearly GH¢13 billion to safeguard the deposits of about 4.5 million Ghanaians in the financial sector bailout, the government has demonstrated its commitment to ensuring a sound financial system and social stability,” he said.

Having attained macroeconomic stability through the pursuit of prudent policies over the last three years, and with steps taken to clean up and institute reforms in the financial sector, process and product innovations and sound regulatory environment will, therefore, be key catalysts to unlocking the growth and development potential of the country, Vice President Bawumia said.

He pledged the government’s support for the initiatives that financial regulatory bodies are currently pursuing to deepen financial markets, ensure soundness, safety of transactions and confidence in the financial sector in the country.

“Let us give confidence to all depositors that we are committed to ensuring the safety of their deposits, the trading capital, and lifetime savings. A sound and stable financial system is a priceless public good,” he said.

The Governor of BoG, Dr Ernest Addison, in brief remarks, said the GMRA-based repo guidelines will be operational from next year and serve as a regulatory guide for the conduct of fixed income securities on the secondary market.

According to the governor, there will be an elaborate training programme for key market players and stakeholders on aspects of GMRA-based repos to ensure its effective implementation.

He outlined key features of the guidelines, including the absolute transfer of title to the buyer, an expanded list of eligible instruments which will promote a more liquid repo market and expanded eligible participation to cover banks, securities dealers, corporate and high net worth individuals.

“Ultimately, these dealings should boost secondary market trading and price discovery of bonds and offer a cheaper and increased source of short-term funding,” he said.