The outgoing Country Director of the World Bank, Henry Kerali has said the Bank of Ghana urgently needs to complete its ongoing financial sector clean-up exercise.
The Bank of Ghana financial sector reforms since 2017 has led to the closing down of nine banks, close 400 microfinance, and microcredit institutions. The central bank has served notice that it will soon move to cleanse the savings and loans and rural banks sector where some institutions are also facing challenges.
But Mr. Kerali at the launch of the World Bank’s 4th edition of the Ghana Economic Update report on Friday said: “Addressing the remaining vulnerabilities in the financial sector is urgent and will require additional efforts in 2019, and over the medium term.”
The report, hich focuses on Financial Sector Development and Financial Inclusion, notes that universal financial access is an attainable target in Ghana with the use of innovative technology and approaches; and the Government must continue to lead the implementation of its financial inclusion strategy over the medium term.
There is also the need to step up effective domestic resource mobilization to ensure that gains on fiscal consolidation are not lost, the report advised.
“Economic growth is expected to be stronger in 2019, but over the medium term a more diversified economy is vital,” said Henry Kerali, World Bank Country Director for Ghana.
The report projects Ghana’s economic growth to increase to 7.6 percent in 2019, driven by both the oil and non-oil sectors. Growth in the non-oil sector is expected to accelerate as policy interventions in agriculture and industry will revitalize the productive sectors.
The report recommends the need to better invest Ghana’s current natural resource wealth in non-natural resource sectors for sustainable growth in the medium-to-long-term.
According to the report, the government sustained its fiscal consolidation efforts in 2018 despite shortfalls in revenue. Fiscal consolidation is however expected to slow in 2019 but the overall outlook will likely remain intact over the medium term domestic revenue mobilization is therefore very important.
“An effective domestic resource mobilization strategy is an urgent priority as the reduction of expenditures, including public investment, in response to revenue underperformances may not be sustainable,” said Michael Geiger, Senior Economist and co-author of the report. “The next election cycle in 2020 will be an important test of fiscal sustainability.”