The banking sector clean-up and recapitalisation of commercial banks last year, has resulted in private sector credit growth in the first quarter of 2018, the Finance Minister has disclosed. Ken Ofori-Atta in his Mid-year Budget Review presentation in Parliament Monday, stated that private sector credit growth recovered as banking sector liquidity improved.  “Annual growth in private sector credit for 2018 was 10.6% compared with 13.4% growth a year earlier. The share of total outstanding credit to the private sector is still high at 88.0% in 2018, down from 89.8% in 2017. “Total outstanding credit to the private sector at the end of December 2018 was ¢37,593.2 million, compared with ¢33,987.0 million recorded in the corresponding period in 2017,” he said.  The Bank of Ghana (BoG) in August 2018, closed down five banks because they were said to have breached several banking regulations.  BoG revoked the licences of uniBank Ghana Limited, The Royal Bank Limited, Beige Bank Limited, Sovereign Bank Limited, and Construction Bank Limited. This is after it closed down UT Bank and Capital Bank in August 2017.  It granted a universal banking licence to Consolidated Bank Ghana Limited established by the government. The two banks were closed down because their liabilities were more than their assets, forcing the Regulator to allow GCB to take their good assets, while PricewaterhouseCoopers recovers the bad debts. The International Monetary Fund (IMF) described the central bank’s action on some banks as crucial for stability and confidence in the financial sector. IMF country representative to Ghana, Dr Natalia Koliadina, told Joy Business although the BoG clampdown is belated, the timing is still right. In January this year, six indigenous banks agreed to relinquish part of their stakes to government in return for equity investment from the state to enable them to recapitalise to GH¢400 million. The banks agreed to the bailout package towards the end of December 2018, paving the way for government to set in motion processes that will allow it to invest a total of GH¢2 billion in the six lenders by March 2019. This, the Finance Minister told Parliament, has paid off.  “The recapitalisation exercise undertaken by Bank of Ghana, which sought to increase the stated minimum capital of banks from GHȼ120 million to GHȼ400 million, ended in December 2018, with a total of 23 banks meeting the requirement. “Following the clean-up exercise, total assets of the banking sector increased by over 12% between June 2018 June 2019. Total deposits also increased by over 22% during this period.  Mr Ofori-Atta said with the rebound of the sector, banks are now poised to deploy their newly-injected capital towards financial intermediation, to aid the development process. “Asset quality has also improved, as reflected in the declining Non-Performing Loans (NPL) ratio from 22.6% in June 2018 to 18.1% June 2019. There were also significant improvements in the banks’ profitability indicators,” he said.  He said in line with the Bank of Ghana’s objective of anchoring inflationary expectations and ensuring the stability of the cedi, the Monetary Policy Rate was lowered further by 300 basis points (bps) in 2018, from 20.0% in 2017 to 18.0% in March 2018, and further to 17.0% in June 2018, and remained unchanged for the rest of the year.  “Average lending rates of banks declined broadly in line with the policy rate to 26.9% in December 2018, down from 29.3% in December in 2017. “Interest rates on both short-end and medium-term government securities, however, generally trended upwards, particularly, in the second half of 2018, reflecting tight financing conditions.”