The Monetary Policy Committee noted that the immediate risks to the disinflation path were well contained and the current conditions provided scope to translate some of the gains in the marco stability to the economy.
He said the Committee also noted that inflation has steadily declined from 15.4 per cent at the end of 2016, to 11.8 per cent in 2017 and further down to 9.4 per cent in 2018, supported in large part by non-food inflation.
He said the Committee observed that the year 2018 ended on a solid note with a more consolidated banking sector as weaker and under-capitalised banks that posed risks to financial stability were removed.
“This enhances the efficiency and profitability of the remaining banks and has restored confidence and resilience in the banking sector, with the banks now better positioned to support private sector-led growth in the Ghanaian economy,” he added.
He said the clean-up exercise has also protected deposits of over 1.5 million depositors with deposits of GH¢11.6 billion, which includes deposits of savings and loans companies, rural and community banks, investment fund managers, pension funds, and life insurance companies with the banks.
The Governor said looking ahead, there would be a need to focus on reducing the high non-performing loans in the sector and addressing the risks associated with the high degree of interconnectedness in the financial system which will require close monitoring to ensure financial stability.
Dr Addison said the Committee noted government’s decision to create and strengthen institutions to provide the needed structures to underpin the commitment to fiscal and financial stability as Ghana concludes the
IMF-supported ECF programme.
“In particular, the passage of the Fiscal Responsibility Act, and the establishment of the Fiscal Council, the Financial Stability Council, as well as the reconstituted Economic Policy Coordinating Committee should anchor fiscal policy and help entrench the macroeconomic gains achieved over the last two years,” he said.
The BoG Governor said this called for a recalibration of the financing policy mix towards more domestic financing by domestic investors to reduce the burden on exchange rate, reserve accumulation and monetary policy.
He said the Committee also observed that domestic growth remains fairly robust and in line with projections and over the medium-term, growth prospects are positive and would be supported by increased oil production and easing of credit stance.