Ghana’s banks have expressed the hope that the banking sector will have adequate cash or liquidity to boost the private sector.
The banker’s optimism is said to be based on the proposed $2.5 billion energy bond which will be issued by the government of Ghana in a bid to aid the VRA in clearing its huge debts to the banks and other stakeholders in the power sector.
In an interaction with members of the press at the 2017 Ghana Economic Forum, the Chief Executive Officer of Zenith Bank Ghana, Henry Oroh disclosed the bond would create enough liquidity for future lending to the private sector.
Commenting on the approach of the administration in addressing the energy debt and banking liquidity issues, Mr. Oroh said: “the current government is thinking of biting the bullet once. They are thinking of about raising 2.5 billion dollar bond that will provide liquidity. Under the previous arrangement, we wouldn’t see liquidity, we only see performing loans. For the legacy bond, the banks will have to invest in those bonds and those bonds will have to be repaid over say 5 yearsâ€.
He noted that the fruits of the measure may not be visible in the short-term but that the funds from the bond are certainly going to be redistributed to the private sector in the long-run.
The Zenith Bank Ghana Chief Executive praised the means adopted by the government in meeting the nation’s financial needs as being ‘fiscally effective’.
He asserted that, “the government is raising bonds from inside and outside the economy and paying those debts thereby injecting liquidity into the banks. Once that happens the banks will now have capacity to support the government more, and there will be capacity to support the private sector. It will be a platform to trigger growth in a very significant way going forwardâ€.
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