Coronavirus: Financial sector will be ‘hit hard’ – Adongo

The Member of Parliament for Bolgatanga Central and minority spokesperson on finance, Isaac Adongo has warned that the country’s financial sector will be hard hit by the covid-19 Pandemic.

The disease has crashed the international capital market.

Finance minister Ken Ofori Atta on Tuesday told parliament that a stimulus package is being considered for companies if need be.

Speaking after receiving a ‘Star of the financial sector awards’ at the Northern Excellence Awards, Mr Adongo argued that the implications of the covid-19 on the local economy could be dire.

He said “now that we have coronavirus, businesses are not going to be able to raise credit to import from China and other places for some time, which is the major source of credit that is generated by our banks. They are going to lose that credit.”

He indicated that the fees and charges that they get from those transactions are not going to happen.

“Corporate bodies are struggling to make sales and therefore they can’t even raise the revenue to come and pay the loans that are contracted in the banks,” he said.

“What then it means is that these loans are going to go bad and they are going to be written off against their capital. So we have a very dangerous financial situation now. And yet BOG will create a different picture and the facts just don’t support it.”

Mr Adongo in analyzing what he describes as the real picture said “they will tell you that deposits have gone up. And if you look at the deposits, we all know that in March 2019 the last batch of banks that were collapsed, Heritage Bank Premium Bank, they issued a bond of 1.5 billion to cover their deposits in March.”

He explained “so when you do that, what you immediately do is that you add GHC1.5 billion to your deposits that doesn’t exist in 2019, it’s actually a 2018 deposit. Now because you are given a bond, you immediately will set an increase in your banking asset by 1.5 because it will go into investment assets. So you see how key measures have been distorted.

“Your deposit is reflecting 1.5 billion that doesn’t relate to the period in question, your assets have grown by 1.5 billion that doesn’t relate to that period in question If you net these two off, you will see that banking sector assets and banking sector deposits are struggling”.