{"id":169395,"date":"2024-04-08T09:48:43","date_gmt":"2024-04-08T09:48:43","guid":{"rendered":"https:\/\/www.ghanamma.com\/2024\/04\/08\/many-banks-may-soon-struggle-due-to-over-subscription-of-govt-bonds\/"},"modified":"2024-04-08T09:48:43","modified_gmt":"2024-04-08T09:48:43","slug":"many-banks-may-soon-struggle-due-to-over-subscription-of-govt-bonds","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2024\/04\/08\/many-banks-may-soon-struggle-due-to-over-subscription-of-govt-bonds\/","title":{"rendered":"Many banks may soon struggle due to over-subscription of govt bonds"},"content":{"rendered":"<p><\/p>\n<div>\n<p>A fiscal report authored by Banking Consultant Dr. Richmond Atuahene and Data and Research Analyst Isaac Kofi Agyei has painted a grim picture of Ghana\u2019s banking sector, attributing it to the excessive subscription of government bonds.<\/p>\n<p>Entitled \u2018Thirsty Banks: Ghana\u2019s 2023 Challenge with High Cash Reserve Ratios,\u2019 the report highlights the prolonged maturity period of government bonds, set for 2031, as a significant concern for many banks.<\/p>\n<p>This extended waiting period poses a risk of depleting the resources of Banks ultimately resulting in insufficient liquidity for day-to-day operations.<\/p>\n<p>The report reveals that a substantial portion of commercial banks\u2019 total deposits, amounting to GH\u00a2224 billion, has been allocated towards the acquisition of government bonds following the domestic debt exchange programme.<\/p>\n<p>The report suggested that\u00a0 \u201cthe Bank of Ghana should have considered the GH\u00a250.6 billion of bonds that were restructured before implementing the new, higher Cash Reserve Ratios; otherwise, it amounts to double accounting. The government bonds have a final maturity period in 2031, and many bank boards and management teams are concerned that this new directive could lead to a depletion of their resources soon as many banks may not be liquid enough to operate.<\/p>\n<p>\u201cThe central question remains: How did the Bank of Ghana establish the new Cash Reserve Ratio without factoring in the restructured bonds held by commercial banks, primarily funded by depositors\u2019 money? Besides Bawumia (2010) argued that the high level of reserve requirements was a legacy of high fiscal deficits so why the heavy dependence on monetary policy to solve a problem deeply rooted in fiscal recklessness?\u201d<\/p>\n<p>The report recommended that the Bank of Ghana should reconsider Cash Reserve Ratios (CRR) reductions and mitigate Non-Performing Loans (NPL) to restore resilience and economic stability in the banking sector.<\/p>\n<p>\u201cRecommendations emphasize a balanced approach, urging BoG to reconsider CRR reductions, factor in restructured bonds, and mitigate NPL risks. Fiscal measures, including substantial budget cuts, are critical to easing inflationary pressures and redirecting credit to the private sector.<\/p>\n<p>\u201cThis holistic strategy aims to restore banking sector resilience, promote economic stability, and foster sustainable growth in Ghana.\u201d<\/p>\n<hr\/>\n<p><em><strong>Explore the world of impactful news with CitiNewsroom on WhatsApp!<\/strong><\/em><\/p>\n<p><em><strong>Click on the link to join the Citi Newsroom channel for curated, meaningful stories tailored just for YOU: https:\/\/whatsapp.com\/channel\/0029VaCYzPRAYlUPudDDe53x<\/strong><\/em><\/p>\n<p><em><strong>No spams, just the stories that truly matter! #StayInformed #CitiNewsroom #CNRDigital<\/strong><\/em><\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>A fiscal report authored by Banking Consultant Dr. Richmond Atuahene and Data and Research Analyst Isaac Kofi Agyei has painted a grim picture of Ghana\u2019s banking sector, attributing it to the excessive subscription of government bonds. Entitled \u2018Thirsty Banks: Ghana\u2019s 2023 Challenge with High Cash Reserve Ratios,\u2019 the report highlights the prolonged maturity period of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":169396,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-169395","post","type-post","status-publish","format-standard","has-post-thumbnail","category-local-news"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Many banks may soon struggle due to over-subscription of govt bonds - Ghanamma.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ghanamma.com\/2024\/04\/08\/many-banks-may-soon-struggle-due-to-over-subscription-of-govt-bonds\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Many banks may soon struggle due to over-subscription of govt bonds - Ghanamma.com\" \/>\n<meta property=\"og:description\" content=\"A fiscal report authored by Banking Consultant Dr. Richmond Atuahene and Data and Research Analyst Isaac Kofi Agyei has painted a grim picture of Ghana\u2019s banking sector, attributing it to the excessive subscription of government bonds. 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