"Economic programme is on course" Governor
The Governor of the Bank of Ghana Dr G.K Agama has noted that the performance of the nation's economic programme is well on course.
He said for the first quarter of this year money supply increased by 1.2 per cent well below the budgeted figure of 2 per cent for the period and 14 per cent for the whole year.
Beside, all other aggregates fell within set targets for the quarter except the high liquidity overhang arising largely from the public sector deficit on crude oil imports. Dr. Agama noted however that this situation has now been brought under control.
Dr Agama announced this when commissioning a new building for the Kumasi branch of the Merchant Bank Limited. The building, called "Dwete Fie" or Silver House is to perpetually commemorate the ascension of Otumfuo Opoku Ware ll to the Golden Stool as the Asantehene.
The Governor had cleared over $600 million of external debts areas which it inherited and reverses built-up stood at over another $600 million by 1994.
These achievement, he said, have given the nation the high credit rating on the international scene and thereby provide sound basis for sustainable capital inflows for rapid economic growth.
Dr. Agama urged banks and other financial institutions to protect the achievement by engaging in prudent lending operations and to resist pressures of unsustainable demands in any form.
He said the central bank urges banks and other financial institution to re-focus their attention on export development because a viable external sector is a necessary condition for study and low inflation growth of the economy.
He noted that even though a visible beginning has been made, there is still room for improvement and advised the banks to take advantage of the incentives the central bank created to turn the tide in favour of making the economy an export economy.
Dr. Agama Announced that the central bank will provide more incentives by reducing the risk involved in the bank's exposure to export credit and mortgage finance from 100 per cent to 50 per cent to encourage credit operations in these ares
He said the relevant draft notice will be sent o banks for their reaction before it is issued. The Governor said one area which deserves keen attention in the country is in the is in the mercantile aspects of internal food production and production and processing.
"When the banks and other non-banking institutions modernise and rationalise finance in this sector they would be contributing significantly to sustain economic reform in the country, especially in terms of the attainment of productivity-based wages, low inflation and healthy balance of payments to support a stable exchange rate regime he said.
Dr. Agama expressed regret that the banking and financial sector has not responded fully to the overall economic policy goals of deregulation and modernisation of market conditions which led to the financial sector to create more completive market conditions.
Thus, the sector has not provided enough incentives to the rapid economic growth. Dr. Agama noted that the divestiture of that state-owned financial institutions is expected to generate keen competition among the banks and non-banks to reduce the cost of financial service and to improve customer service.
He emphasised that the survivors in the competition will be those who recognise the fact the preferences of the customer are paramount.