Bank Of Ghana Maintains Prime Rate At 12.5%

The Monetary Policy Committee (MPC) of the Bank of Ghana has maintained the prime rate of 12.5 per cent the committee set in December last year.
Briefing the media in Accra yesterday on the outcome of the MPC meeting, Dr Paul Acquah, who is the chairman of the committee and also the Governor of the Bank of Ghana, said though the economic fundamentals remained strong due to the acceleration of the economy in the last quarter of last year there was the need to keep that tempo of economic growth.
He said the banking industry had built a strong balance sheet and an increasing or diversified asset and private sector credit portfolio, which was likely to improve the economic expansion of the country.
The Governor was, however, quick to add that the continued load shedding and unpredictable energy supply was constraining activity in the sector that mainly relied on electricity for its activities which was leading to losses and cost price pressures.
Dr Acquah stated that the external payout outlook remained favourably positive as commodity prices for cocoa and gold were held firm.
He said crude oil price volatility had reduced with the range of price adjustment uncertain but within tolerable limits and stated that the economy had positioned itself firmly with inflation easing towards a single digit.
He said fiscal policy over the past year had been a source of considerable stimulus and this was being driven by exceptional expenditures mostly in the supplementary budget and the large public sector wage settlements.
The chairman stated that the financial sector had seen an increased growth as banks had taken advantage of opportunities to diversify their portfolios as well as grow their assets.
He said based on the latest data, total assets of the banking industry grew by 41 per cent to ¢51,837.2 billion at the end of 2006, compared with 17.5 per cent in 2005.
He said the growth in the financial sector was also taking place against the background of improved financial sector indicators, adding that “the banking system is well capitalised, profitable, efficient and fairly liquid”.
Dr Acquah said the ratio of non-performing loans in total loan portfolio continued to decline and that it fell from 11 per cent in October 2006 to 7.9 per cent in December last year and further to 7.5 per cent at the end of January 2007.

Link to Graphic Ghana - News