The Governor of the Bank of Ghana, Dr. Ernest Addison, has proposed that the 2022 budget should be used to reset fiscal policy to create a more credible path towards medium-term fiscal sustainability.
“This would be an important building block to establish and entrench credibility, a key component to stability,” he said at the 10th edition of the Ghana Economic Forum in Accra.
“The relatively strong performance of the economy in spite of Covid-19 was due to home-grown policy credibility that had been earned over four years of economic reform. The fiscal and monetary policy framework that was implemented provided a solid anchor to disinflation,” he added.
The 2022 budget will be presented to Parliament next month and is expected to focus on promoting an inclusive and sustainable post-pandemic recovery.
Touching on the economy’s response to the pandemic, Dr. Addison said the National Financial Inclusion Development Strategy (2018-2023), the Digital Financial Services Policy (2020-2023), and the Cash-Lite Ghana (Building an Inclusive Digital Payments Ecosystem) Agenda were some of the policies which laid the foundation for the economy to be able to withstand the shock.
He added that comprehensive reforms and recapitalisation positioned banks with strong capital buffers before the onset of the shock. Furthermore, he said the financial sector received a further boost with macro-prudential regulatory reliefs to ease liquidity constraints and allow them to provide financial support to critical sectors of the economy.
Following these interventions, Dr. Addison said the banking sector has remained stable, liquid, and profitable, adding the latest stress tests and macro-prudential risk assessments on the industry show that banks are strong enough to withstand mild to moderate liquidity and credit risk shocks.