Government has paid about GH¢200 million to institutional investors in the last two weeks.
It has also paid all individuals who opted out of the Domestic Debt Exchange
Programme (DDEP) exercise while it has also started paying institutional
holders who did not participate in the DDEP.
On various due dates, the government has paid all cash coupons and
Payment-in-Kind (PIK) coupons on the DDEP Bonds.
Governor of the Central Bank, Dr. Ernest Addison, who made these known, said
the economic headwinds that weighed on the recovery process were gradually
easing, and has provided a conducive environment.
He was speaking at the launch of the Commercial Market Paper in Accra recently.
“So far, the market has been calm, backed by some recent debt servicing by the
government….Economic activities are picking up. The Bank’s high-frequency real
sector indicators point to a continued pickup in economic activity in 2024. The
Bank’s latest confidence surveys reflected sustained improvements in business
sentiments. Headline inflation has remained broadly stable since December 2023.
Fiscal performance points to some consolidation, as the 2023 targets were
broadly met. The exchange rate has been generally stable until recent weeks
when some headwinds have been observed in segments of the market, but this is
given much attention as the Bank has built-up enough reserves to tackle the
pressure on the market,” he noted.
Indicating that the banking sector’s performance had also rebounded after the
DDEP, he said that notwithstanding, credit to the private sector by banks had
remained weak.
It was in response to this and to anchor inflation expectations that the Bank
of Ghana introduced the dynamic Cash Reserve Ratio (CRR), which is dependent on
bank’s loan-to-deposit ratio.
“This strategy by the bank is to create incentive for the banks to undertake
effective intermediation of their resources in support of the economy, while at
the same time mopping up excess liquidity in the system to support the
disinflation process. The introduction of the Commercial Paper Market is,
therefore, a step in the right direction to augment the efforts of the Bank of
Ghana towards addressing the financing gap within the private sector,” he
stressed.
He continued that the Bank of Ghana stood ready to collaborate on policy and
operational matters needed to drive innovation in the commercial paper market
space.
“Additionally, we remain steadfast in our commitment to enforcing regulations
to uphold the integrity of our banking system,” he said.
Commenting further, Dr. Addison said the recent sanctions imposed on certain
banks for violating foreign exchange (FX) laws underscored the importance of
vigilance and dedication from all participants in the financial sector.
“Without a collective commitment to a rule-based operating financial
environment, we risk undermining the trust and credibility essential for a
world-class financial system. Therefore, I urge the Ghana Stock Exchange to
strictly enforce the regulations pertaining to commercial paper issuance,” he
said.
“With this launch, Pillar 1 of the CMMP, which is to improve the diversity of
investment products and liquidity of the securities market has been achieved
and I am optimistic that this will lay the foundation for achieving the
remaining three pillars of the 10-year strategic Capital Market Master Plan,”
he said.
He, furthermore, noted that with the introduction of the Commercial Paper
market in Ghana, the plan to diversify the investment space and investor base
was now fully on course.
“My understanding is that, in line with pillar four (4) of the CMMP, the
Securities and Exchange Commission has also approved the Commercial Paper
Issuance and Admission Rules to help regulate the Commercial Paper Market.
This is good progress, which should spur the achievement of the overall
objectives of the 10-year strategic plan,” he said.
“Therefore, the launch of a formal Commercial Paper Market has come at the
opportune time to create new investment opportunities for institutional
investors, such as pension funds, insurance companies, and asset management
firms. This will also instill market confidence in the product and give
protection to investors,” he added.
Source: dailyguidenetwork.com