The Central Bank has revealed that the ratio of non-performing loans (NPL) in the banking sector is on the high, as it stands at 18.7% as of March this year.
It said that the high NPL situation has implications for the effectiveness of monetary policy conduct as it acts to impede the transmission of the monetary transmission mechanism.
The BOG has however began its regular meeting to review the health of the economy in this regard. The Monetary Policy Committee of Central Bank will conclude its meeting with a news conference on Monday to announce a review of the policy rate which currently stands at 16 percent which is indicative of the rate at which the Central Bank lends to commercial banks in the country.
Governor of the Central Bank Dr Ernest Addison said “the key risk factor going forward has to do with the high level of NPL’s which is of serious concern and has to be tackled with some urgency. As regulators we have closely monitored the development in these NPL’s I’ll say that in spite of the improvement of our loan write ups, the NPL ratio remains high at 18.7% as of the end of March 2019.”
He added “this level by all measures is not acceptable and more work needs to be done in this area. The high NPL situation has implications for the effectiveness of monetary policy conduct as it acts to impede the transmission of the mechanism, the monetary transmission mechanism.”
“As you are aware, we’ve been trying to lower the policy rate but we are not seeing the transmission of the lower policy rate u the lending rate to banks, primarily because of the high non-performing loans,” he noted.
Source: Ghana/Starrfm.com.gh/103.5FM/Senanu Damilola Wemakor
