First deputy governor of the bank of Ghana, Dr. Maxwell Opoku-Afari
The Bank of Ghana has stated that it is not in a rush to withdraw the raft of measures it introduced last year at the onset of the pandemic, as economic recovery remains fragile.
Speaking at a financial literacy programme for journalists over the weekend, Dr. Maxwell Opoku-Afari, the first deputy governor of the bank, said the central bank was cautious about rolling back the policies which contributed to the banking sector’s resilience against the pandemic.
“A key issue going forward relates to the timing of withdrawal of policy support. This would need to be carefully done so as not to jeopardise the recovery process, and the bank will continue to monitor developments and take appropriate decisions,” he said.
At the onset of the pandemic-induced restrictions, the central bank cut its policy rate by 150 basis points and announced a relaxation in some prudential requirements to create room for banks to lend to critical sectors.
The measures, combined with the government’s own specific policy interventions—such as subsidised water and electricity costs—helped prevent the economy from slumping into recession.
The economy last year grew at a rate below one percent—the lowest in 37 years. With the Ghana Statistical Service’s GDP data for the first quarter of 2021 showing an expansion year-on-year of 3.1 percent, Dr. Opoku-Afari said the bank is acting in a cautious manner as Covid-19 still remains a threat.
“A careful balancing act between unwinding the policy support would be needed by policymakers to ensure that stability in a post-pandemic environment is guaranteed,” the first deputy governor said.
Banking consultant Dr. Richmond Atuahene said the possibility of a third wave of Covid-19 deepens the uncertainty and threatens the recovery.
With the threat of a third wave, vaccine procurement constraints and the highly transmissible delta variant seen in Ghana, the economist believes any attempt to unwind the policy support “will erode the gains made in the recovery process.”
He recommended to the government to maintain the relief measures through to 2022.