Economy Well Positioned for Take-Off

The country's central bank has announced that the economy is well positioned for take-off.

Dr. Mahamudu Bawumia, 2nd Deputy Governor of the Bank of Ghana (BoG) who made the announcement said over the last couple of years there has been significant success chalked in ensuring financial stability.

"The financial soundness indicators (FSIs) of the banking sector, a dominant player in the financial system, have all seen positive developments", he said. The occasion was the inauguration of Unibank's branch in Kumasi.

He disclosed that the quality of loan portfolio of the banking system continues to improve while, high non-performing loans to gross loans (NPL) ratio is a thing of the past having declined significantly from 22.7 percent in December 2002 to 7.5 percent in January 2007.

Dr. Bawumia said following this development the industry's loan loss provision to gross loans has reduced from 18.2 percent to 7.2 percent over the same period.

"In the same vein NPL net of provisions to capital ratio has dropped from 27.2 percent in December 2002 to 1.3 percent in January 2007", he stated.

He pointed out that the improvement in portfolio quality, coupled with the abolition of secondary reserves and improved capital levels, have led to increasing access to credit, pushing the ratio of gross loans and advances to gross Domestic Product (GDP) from 14.8 percent in December 2002 to 22.8 percent in January 2007, while private sector share in gross loans and advances stands at 66.1 percent.

He further explained that inflation has been kept under control and savings and investment horizons, which are vital for the promotion of economic growth and investor confidence have been lengthened