BoG: Banking Sector Recovers After DDEP (Capital Up, NPLs Down, Gold Reserves Boosted)
Dr. Johnson Pandit Asiama, the Governor of the Bank of Ghana, said that the Domestic Debt Exchange Programme (DDEP) initially put a strain on banks’ balance sheets, lowering their capital buffers and limiting their ability to lend. However, ongoing recapitalization and regulatory oversight have made the sector stronger. Capital adequacy has gone up to 17.5%, and the number of non-performing loans has gone down from 21.8% to 18.9%. Banks are slowly getting back to being able to support economic activity. To keep inflation in check, the central bank has kept a strict monetary policy. To improve policy transmission, it has dealt with too much liquidity. It has also rebuilt its external reserves by increasing exports, remittances, and the Domestic Gold Purchase Programme, which has raised gold holdings from 8.7 to over 40 tonnes. Part of the gold was turned into foreign currency to diversify reserves and help keep things stable outside of the country. Policy changes have also helped bring down inflation, make the exchange rate more stable, and build up international reserves.
