Minority Leader Bawumia's EMT policies have severely eroded bank capital -

Leader of the minority Cassiel Ato Forson

Cassiel Ato Forson, the minority leader, has stated that the policies of the economic management team headed by Vice President Mahamudu Bawumia are currently harming banks.

Dr. Forson stated in a tweet, "I am deeply concerned about the current state of our banking sector, particularly the effect of government policies on our local banks."

"It's no secret that many of these banks, which are essential to the success of small and medium-sized enterprises (SMEs) in Ghana, are experiencing severe financial difficulties," he said.

He stated, "Under the leadership of Alhaji Bawumia, the Head of EMT, the NPP government implemented policies that severely eroded the capital of the majority of our banks."

According to him, this "has a devastating impact on their ability to lend to businesses, create jobs, and contribute to the expansion of our economy."

"I believe it's time to have a serious discussion about how we can support our local banks and help them weather this difficult period", Dr. Forson suggested.

A few days ago, Bloomberg reported that Ghana's decision to restructure its local-currency and foreign-currency debt resulted in the first-ever loss for two of the West African country's leading banks.

The country's largest lender by assets, GCB Bank Plc, reported a net loss of $50.5 million for the year ending in December, its first since 1993, when Bloomberg began maintaining data.

Standard Chartered Bank Ghana Ltd., the largest bank by market capitalization, posted a loss of 297,8 million Ghanaian cedis.

Bloomberg reported that banks operating in the second-largest economy in West Africa have suffered losses of approximately $1.4 billion as the country restructures the majority of its public debt, estimated at 576 billion cedis.

Guaranty Trust Holding Company, Nigeria's largest bank by market value, vowed to reduce lending and bond trading in Ghana in response to the impairments.

After impairing its debt securities, GCB Bank recorded a charge of 1.83 billion cedis, while Standard Chartered Bank Ghana recorded a charge of 173 million cedis.

Lenders in Ghana were granted an additional month to disclose full-year earnings.

After spending pressures from an energy crisis between 2013 and 2015 and a comprehensive banking-sector cleanup in 2018 were compounded by disruptions from the Covid-19 pandemic and Russia's invasion of Ukraine, the national debt increased.

As part of the reorganization, Ghana exchanged 87.8 billion cedis worth of local notes yielding an average of 19% and bonds yielding as low as 8.35%, resulting in losses for financial institutions.

The government of President Nana Akufo-Addo has also initiated talks with international debt holders in an effort to finalize a $3 billion assistance from the International Monetary Fund.

The IMF desires that Ghana reduce its debt to 55% of GDP by 2028. Before government intervention, it was anticipated to reach 109%.