The International Monetary Fund (IMF) has described the recent Bank of Ghana 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.

“I think that these issues probably have been accumulated over many years and it is actually to the great benefit of the economy that the Bank of Ghana has been taking these very bold and decisive measures,” she said.

“It is very timely because the last thing that you would like to see is diminishing confidence in the banking sector,” she added.

Background

The Bank of Ghana earlier this month closed down five banks because they are said to have breached several banking regulations.  This is after it closed down UT Bank and Capital Bank in August 2017.

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 IMF had earlier published several reports warning the Bank of Ghana to take some corrective measures within the banking sector. Many have said if the Bank of Ghana had listened to the IMF earlier, the sector would have been cleaned earlier.

Higher debt stock

The IMF has also warned that Ghana’s debt stock is likely to increase due to the over GHS8 billion spent in the wake of the banking collapse.

The IMF country director, Natalia Koliadina, told Joy Business the expenditure on the collapsed banks would definitely increase the debt stock by the end of this year.

"This is because this is government debt and it would obviously be classified as government debt,” she said.