BoG Governor re-affirms end of IMF program in April 2018

Governor of the Bank of Ghana (BoG) has re-affirmed president Akufo Addo comments that the International Monetary Fund (IMF) program would end next year. 

The President at a news conference on six months in office noted that the IMF program would end in April 2018 and would not be extended “there is no question about the IMF program being extended beyond April 2018, and we want to complete it and move on”.

The Finance Ministry later in a statement maintains that the president’s comments did not mean that Ghana was pulling out of the IMF program. 

Responding to JOYBUSINESS’ question during a press conference by Monetary Policy Committee (MPC), the governor said, “the president said we would end the program in April 2018 and I think it’s clear to everybody.”

“The finance minister has also noted that the 2018 budget would be set under IMF program so effectively that budget that would be carried forward to 2018 would be implemented,” he added.

Monetary Targets set under the IMF program.

Dr Addison said the monetary targets that have been set under the program should be seen as the country’s own targets aimed at stabilizing the monetary space rather than something that is being pushed on them by the IMF.

“These are targets that we would have put in place with or without an IMF program,” he said.

Delays by banks in responding to policy rate cuts.

The governor noted that the challenge has come about because a lot of commercial banks had initially locked their funds into long term facilities at a higher cost.

“They need to wait for these funds to mature for the necessary re-pricing or reduction in the average cost before they can really respond to interest rate reduction,” he said. 

He explained that until the average cost of funds goes down, it would be difficult to witness that quick transition mechanism.

Dr Addison was however optimistic that the consistent reduction in the policy rate would influence the average cost of funds of funds for necessary adjustment to be done.

Getting tough with the banks 

The governor promised that going forward the Central Bank would indeed be tough on commercial banks to ensure that the industry is sound.

He said BoG want to avoid situations where they overtake by events and prevent them to recognizing some non-performing loans in the industry.

“Going forward we hope standards would be maintained and if we do that I don’t think that we would be in a situation where we are suddenly confronted with numbers that we didn’t know we were sitting on,” he noted.

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