Shore up forex inflows to sustain cedi - CIB boss

President of the Chartered Institute of Bankers (CIB) Clifford Duke Mettle says government must identify and put to check trade-related activities that harm the economy and also ensure an investment-friendly atmosphere so as to increase forex inflows to sustain the cedi.

Speaking at the 19th national banking conference of the institute in Accra, he said the continual fluctuation of the local currency is not helping the fortunes of key economic sectors, including the banking industry.

The concerns of the banker illustrate a current market situation whereby commercial banks in the country have started cutting loans and advances to businesses and consumers as non-performing loans pile-up on their balance sheets.

He said: “As a country, we should be looking at stabilising and sustaining the local currency as the current fluctuations do not help the banking industry, with bank loans being affected.

“Government must create an enabling environment to push foreign direct investments into the country to shore-up forex inflows on the demand side -- and ensure improved production and consumption of local goods and services on the supply side -- to sustain the cedi.”

According to the latest Bank of Ghana macroeconomic and financial data report, banks in the country have within a month cut credit to customers from GH¢29.1billion in August to GH¢28.7billion at the end of September.

The cut in loan advances is considered as a further tightening of credit to customers, since a difficult business operating environment has caused many businesses and consumers to default on their loans.

Mr. Mettle suggested the need for a long-term export-based capacity building strategy and prudent monitoring and management of various operations in critical sectors whose loss have dire repercussions on the economy such as mining and telecoms.

As the country enters an election year, the banker called for improved fiscal consolidation and financial discipline, and the commitment of government to deal with challenges at the micro-economic level.

The conference on the theme ‘Building a stable local currency; a prerequisite for sustainable growth, convened chieftains of the banking industry to deliberate on how the pressure on the cedi could be tackled, and formed part of activities marking this year’s Bankers’ Week celebrations.

Deputy Finance Minister Helen Mona Quartey, in a speech read on her behalf, said government remains relentless in efforts to diversify and expand the country’s export base with a target of US$5billion non-traditional export earnings in the short-term.

She said the economy’s prospects remains bright, as various investments in the energy sector will reduce oil importation bills as well as help sustainable power production to push socio-economic growth.