BOG MPC MEETING NOVEMBER 2020 – 4

97th-MPC-Press-Release-23rd-November-2020-2

Summary-of-Economic-Financial-Data-November-2020-2

IN BOG MPC MEETING NOVEMBER 2020 – 4, I FOCUS ON FOUR TOPICS. THESE ARE:

— MONETARY INDICATORS;

— BANKING SECTORS INDICATORS;

— STOCK MARKET PERFORMANCE; AND

— PAYMENT SYSTEM DATA.

AT THE END OF THIS ARTICLE, I WILL ADD A CONCLUSION.

AS USUAL, YOU CAN DOWMLOAD THE NECESSARY DOCUMENTS FROM THE TOP OF THIS ARTICLE.

  1. MONETARY INDICATORS

NEARLY ALL MONETARY INDICATORS – APART FROM SAVINGS AND TIME DEPOSITS IN BROAD MONEY – SHOW A POSITVE TENDENCY. LIQUIDITY IS STRONGER, AND THE TOTAL LIQUIDITY INCREASED SIGNIFICANTLY. ESPECIALLY, THE FOREIGN CURRENCY DEPOSITS ROSE TO NEW HEIGHTS. THIS MIGHT NOT BE A GOOD SIGN. BUT PERSONALLY, I DO NOT SEE ANY “DOLLARISATION” HERE. INSTEAD, I SEE MORE AN ATTEMPT TO BENEFIT FROM A TEMPORARY HIGH DOLLAR COMPARED WITH THE CEDI. MEANWHILE, THE CEDI HAS STABILISED AGAINST THE DOLLAR, AND I EXPECT THE DEPOSITS SWITCH MORE TO LOCAL DEPOSITS IN THE NEAR FUTURE.

WE SEE IN THE SOURCES OF CHANGE IN BROAD MONEY THAT NET DOMESTIC ASSETS ROSE SIGNIFICANTLY. ON THE OTHER HAND, NET FOREIGN ASSETS DECREASED BY NEARLY 50 PERCENT. IN THIS, I SEE A FURTHER TURN TOWARDS THE DOMESTIC ECONOMY, AND A CONFIDENCE IN POSITIVE DEVELOPMENT.

ALSO, THE PRIVATE SECTOR CREDIT INCREASED IN ALL CATEGORIES, NOMINAL AND REAL. FOR ME, THIS IS ANOTHER HINT THAT IN THE NEXT MONTHS, ECONOMIC ACTIVITIES WILL STEP UP FURTHER. THE PRIVATE SECTOR WILL SPEND MORE MONEY, WHICH WILL PUSH UP LOCAL PRODUCTION.

2. BANKING SECTOR INDICATORS

THE DEVELOPMENT OF THE BANKING SECTOR SUPPORTS THE AFOREMENTIONED PREDICTION. THERE ARE ONLY THREE EXCEPTIONS. THESE ARE;

—THE ANNUAL GROWTH OF THE TOTAL ADVANCES;

— THE LIQUIDITY INDICATORS; AND

—THE CAPITAL ADEQUACY RATIO.

BUT, EVEN THE LATTER IS WITH 20 PERCENT MUCH HIGHER THAN THE ACKNOWLEDGED MINIMUM. AFTER THE BANKING SECTOR CONSOLIDATION, THE SECTOR HAS STABILISED TO AN ASTONISHING EXTENT.

ALSO, THE LIQUIDITY INDICATORS ARE NO REASON FOR A BIG CONCERN. IT IS STILL WITHIN A RANGE THAT IS ACCEPTABLE. FOR MY UNDERSTANDING, THE RATIOS SHOULD NOT GO DOWN  UNDER 20 PERCENT AND 25 PERCENT RESPECTIVELY.

3. STOCK MARKET PERFORMANCE

THE PERFORMANCE OF THE GHANA STOCK EXCHANGE [GSE] IS AN EXAMPLE THAT THE FINANCIAL MARKETS ARE NOT THE MAINSTREAM ECONOMY. WHEREAS THE GENERAL ECOMOMY SHOWS POSITIVE SIGNS, THE STOCK MARKET INDICES LINGER IN BOTTOM TERRITORY. THIS IS THE SAME SINCE THE PANDEMIC STARTED AFTER THE PEAK AT THE BEGINNING OF THE YEAR. WE CAN ONLY HOPE THAT THE INDICES HAVE FOUND THEIR BOTTOM GROUND AT 1800 AND 1600 RESPECTIVELY.

4. PAYMENT SYSTEM DATA

UNLIKE THE STOCK MARKET, THE PAYMENT SYSTEM DATA SHOW A STRONG PERFORMANCE. THIS IS ESPECIALLY TRUE FOR THE MOBILE MONEY DATA. MOBILE MONEY TRANSACTIONS AND VALUE OUTPERFORM OTHER PAYMENT SYSTEMS BY A WIDE MARGIN. I  EXPECT THE USE OF THE MOBILE MONEY PAYMENTS TO INCREASE FURTHER IN THE FORESEEABLE FUTURE.

BUT, AN EXTRAORDINARY INCREASE ALSO DEPENDS ON AN  IMPROVEMENT OF THE SERVICES. E.G., THE FINANCIAL SERVICES COULD BE BETTER. ALSO, THERE SHOULD BE THE DEVELOPMENT OF THE CONNECTION BETWEEN MOBILE MONEY OPERATORS AND THE RURAL BANKS. THIS WOULD ENABLE CUSTOMERS OF RURAL BANKS TO TRANSFER MONEY FROM AND TO THEIR RURAL BANK ACCOUNTS.

E-ZWITCH ALSO PERFORMED QUITE WELL. THIS IS BASED ON THE GOVERNMENT TRANSFERRING SUPPORT OFTEN THROUGH THIS PAYMENT METHOD.

OTHER PAYMENT SYSTEMS DID NOT SEE SUCH A POSSITIVE DEVELOPMENT. WE CAN ASSUME THAT THE TENDENCY GOES MORE AND MORE TOWARDS MOBILE MONEY AT THE EXPENSE OF OTHER PAYMENT SYSTEMS.

5. CONCLUSION

THE SUMMARY OF FINANCIAL AND ECONOMIC DATA SHOW THAT THE GOVERNMENT AND OTHER STAKEHOLDERS ARE ON THE RIGHT PATH. AS USUAL, THE GOVERNMENT’S FISCAL OPERATIONS NEED IMPROVEMENT. ON THE OTHER HAND, THE GOVERNMENT’S ECONOMIC PROGRAMMES ALREADY HAVE AN IMPACT ON THE DEVELOPMENT. CONSEQUENTLY, WE CAN ASSUME THAT THE FISCAL OPERATIONS WILL ALSO IMPROVE IN 2021. THIS WILL HAPPEN IF THIS GOVERNMENTS GETS FOUR MORE YEARS TO FINISH THE STARTED MEASURES.

BOG MPC MEETING NOVEMBER 2020 – 4 IS THE LAST PART OF MY ARTICLE SERIES. A NEW SERIES OF ARTICLES WILL COME ON AFTER THE NEXT MEETING IN JANUARY .

STAY TUNED…

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