BANK OF GHANA MPC NOVEMBER MEETING – PART 3

Summary_of_Economic__Financial-Data_November-2019

MPC-Press-Release-Nov.-2019

IN THE LAST PART OF MY ARTICLE SERIES – BANK OF GHANA MPC NOVEMBER MEETING – PART 3 – I DISCUSS

— MONETARY INDICATORS,

— BANK ING SECTOR INDICATORS, AND

— STOCK MARKET PERFORMANCE.

AT THE END OF THIS ARTICLE, A CONCLUSION AND OUTLOOK WILL FOLLOW.

MONETARY INDICATORS

GENERALLY, THE MONETARY INDICATORS DISPLAY A POSITIVE PICTURE. THE TOTAL LIQUIDITY REMAINED THE SAME AS THE MONTH BEFORE. FURTHERMORE, NARROW MONEY AND BROAD MONEY (M1 AND M2) INCREASED, ALBEIT BASICALLY MARGINAL. THE INCREASE IN BROAD MONEY IS MAINLY DUE TO A SHARP INCREASE IN NET FOREIGN ASSETS.

HOWEVER, THE MOST INTERESTING ISSUE IN MONETARY INDICATORS FOR THE GENERAL PUBLIC IS THE PRIVATE SECTOR CREDIT. HERE, WE SEE A STEADY INCREASE IN THE NOMINAL CREDIT WITHIN THE LAST 4 PERIODS. AT THE SAME TIME, ALSO THE REAL GROWTH OF THE PRVATE SECTOR BOUNCED BACK. THIS IS FROM A SLIP IN THE REAL CREDIT IN THE LAST MONTH.

THE DEVELOPMENT OF THE PRIVATE SECTOR CREDIT SHOWS A SLIGHT ATTEMPT OF THE BANKING SECTOR TO IMPROVE THE LOAN PORTFOLIO. UNDERSTANDABLY, WE CANNOT CONSIDER THAT TO BE ENOUGH. THE BANKS WANT TO CONSOLIDATE THEIR SITUATION AFTER THE BANKING CRISIS IN GHANA. BUT AS THE BANKING SECTOR WAS PUT ON STRONGER FEET, WE CAN EXPECT A FURTHER ENGAGEMENT IN THE NEAR FUTURE. THIS IS ALSO ON THE BASE OF THE ADDITIONAL MEASURES OUTLINED BY THE BANK OF GHANA. YOU CAN CHECK THESE MEASURES IN THE APPENDIX TO THE MPC PRESS RELEASE.

BANKING SECTOR INDICATORS

HERE WE CAN CONTINUE EXAMINING THE DEVELOPMENTS IN THE BANKING SECTOR. THIS BANKING SECTOR SEEMS REALLY TO HAVE STABILISED IN THE MONTHS AFTER THE INTERVENTION BY THE BANK OF GHANA. THERE IS NOT MUCH MOVEMENT EITHER IN THE POSITIVE OR IN THE NEGATIVE SIDE.

WE CAN SEE THAT GENERALLY AS A MOVE IN THE RIGHT DIRECTION. NOT MUCH VOLATILITY IS A SIGN OF CALM IN THE SECTORS CONCERNED. AND A CALM BANKING SECTOR IS GOOD FOR EVERY ECONOMY.

NEVERTHELESS, THE BANK OF GHANA – AS ALREADY MENTIONED – INTRODUCED SOME MEASURES TO IMPROVE LOAN DISTRIBUTION. I BELIEVE THAT THESE MEASURES WILL DO MUCH TO FOSTER THE ROLE OF THE BANKING SECTOR IN THE ECONOMY.

STOCK MARKET PERFORMANCE

UNFORTUNATELY, WE CANNOT SEETHE SAME POSITIVE DEVELOPMENT AT THE GHANA STOCK EXCHANGE. IN THE PERIOD UNDER REVIEW, BOTH COMPOSITE AND FINANCIAL LOST AGAIN. THIS BRINGS THE LOSING STREAK TO OVER ONE YEAR.

THE GOOD NEWS IS THAT IN THE LAST DAYS THE GHANA STOCK EXCHANGE HAS ALSO STABILISED. UNFORTUNATELY, THIS STABILISATION IS ON A VERY LOW LEVEL. BUT AS THE SAYING GOES: YOU SHOULD NEVER GIVE UP HOPE…

SUMMARY AND OUTLOOK

THE ECONOMIC AND FINANCIAL DATA FOR NOVEMBER 2019 SHOW THAT GOVERNMENT AND ITS AGENCIES ARE ON THE RIGHT TRACK. THERE IS ONLY ONE MAJOR PROBLEM, AND THAT IS THE FISCAL POSITION OF THE GOVERNMENT. SADLY, THE FISCAL SITUATION HAS SOME EFFECT ON OTHER PARTS OF THE ECONOMY, LIKE THE PERFORMANCE OF THE LOCAL CURRENCY. GOVERNMENT HAS INTRODUCED SOME MEASURES TO IMPROVE ITS FISCAL POSITION. IF THESE MEASURES ARE SUCCESSFUL, THERE IS NO DOUBT THAT THE COUNTRY IS ON THE RIGHT PATH. IT MIGHT EVEN BE THAT THE COUNTRY MOVES UP FROM A LOW MIDDLE-INCOME COUNTRY.

BUT TO BE SUCCESSFUL, ANY GOVERNMENT NEEDS THE COOPERATION OF THE POPULATION. AS I ALWAYS SAY, AT LEAST 50% OF ALL PROBLEMS ARE CAUSED BY THE POPULATION. THIS IS INDEPENDENT FROM THE QUESTION WHICH GOVERNMENT RULES. THE BEHAVIOUR OF THE POPULATION CAN EITHER SAVE OR COST ANY GOVERNMENT BILLIONS OF CEDIS.

THEREFORE, SUPPORT YOUR GOVERNMENT BY

— PAYING YOUR TAXES,

— DON’T THROW YOUR GARBAGE IN THE GUTTER,

— LIVE HEALTHY,

AMONG OTHER ISSUES.

BANK OF GHANA MPC NOVEMBER MEETING – PART 3 IS THE LAST PART OF MY ARTICLE SERIES CONCERNING THIS SUBJECTS. BUT OTHER ARTICLES ON ECONOMY ANF FINANCE WILL FOLLOW.

STAY TUNED!

 

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