The clean-up has also created a well-capitalised and liquid banking sector that is well-positioned to improve the flow of funds in the economy and to drive private-sector-led growth and development, he said at the maiden Town Hall Meeting of the Economic Management Team on last Wednesday.

Dr Bawumia, who heads the team, was updating Ghanaians on the progress of work of the team and the government in general in a presentation titled ‘Our Progress, Our Status, Our Future.’

In the almost one-hour presentation that was laced with his usual analogies, innuendos and political jabs, the Vice President touched on virtually all sectors of the economy, with conclusions that the government had performed better and improved the lives of the people within the two years that it has been in power.

The presentation was followed by questions and answers, which were handled by members of the EMT, comprising, among others, the Senior Minister, Mr Yaw Osarfo-Maafo, the Finance Minister, Mr Ken Ofori-Atta, the Minister of Monitoring and Evaluation, Dr Anthony Akoto-Osei, the Minister of Planning, Prof. Gyan Baffuor, and the Minister of Energy, Mr John Peter Amewu.

Credit growth

Regarding the banking sector, Dr Bawumia said the industry was now more resilient and ready to support growth compared to previously when it was weak and home to fragile banks.

He mentioned the bank consolidation exercise, which purged the sector of almost one-third of the number the banks and the recapitalisation directive that saw banks’ stated capitals jumping from GH¢120 million to GH¢400 million by December 2018.

These reforms by the Bank of Ghana, he said were part of a wider plan to create a banking sector that can drive private-sector-led growth and development.

He said the fruits of the exercise were already showing, with the central bank reporting that “private sector credit growth has gained some momentum, stemming from improved liquidity position of the banks on the back of the recapitalisation exercise.

“Annual growth in private sector credit was 21.1 per cent in February 2019, compared with 2.4 per cent growth in the same period of 2018. In real terms, private sector credit expanded by 10.9 per cent,” Dr Bawumia, quoting a BoG April 1 Monetary Policy Committee press statement”.

Costly exercise

While necessary, he said the exercise “has not been costless.

“The ggovernment had to spend a total of some GH¢12 billion for the banking sector clean-up in order to restore confidence and promote financial stability.

“In all, we have managed to save some 1.5 million depositors from losing their deposits, some their entire life-time savings,” he said.

The collapse of the nine banks also led to loss of jobs, crudely estimated at over 4,000 jobs.

Gross reserves rebound

On the external sector, the vice president said the country had seen marked improvements in gross international reserves, resulting mainly from improvements in the current account and increased capital inflows.

“GIR reached US$7.56 billion at the end of December 2017 (4.3 months of import cover),” he said but explained that net foreign exchange reserves declined in 2018 due to some challenges.

“First is the forex sales by the Bank of Ghana in its normal exchange rate management. Second is the portfolio outflows as foreign investors repatriated coupons and principal investments because of rising US interest rates and concerns over Ghana’s exit from the IMF programme,” he said.

He, however, explained that following the recent Eurobond issue, the GIR as at March 2019 stood at US$9.9 billion, equivalent to five months of import cover.