A financial analyst, Michael Dawson has justified the decision of the Bank of Ghana (BoG) to sanitise the banking sector, as part of measures to restore stability in the banking sector.
He indicated that the sector was at a near collapse, hence the decision by authorities to undertake the reforms.
“I can tell you that, some depositors were not getting back their funds from some of the financial institutions.
“Some of the banks had also breached several banking regulations. Indeed, the financial system at the time, was on the brink of total collapse.
“The central bank had clearly explained that the clean-up was based on poor business practices and weak capital positions of the banks and financial institutions. I am aware that the liabilities of some of the banks were more than their assets,” he said.
Mr Dawson made these comments following a statement by Mensah Thompson, the Executive Director of the Alliance for Social Equity and Public Accountability on Accra FM’s morning show that the banking sector reforms was destructive to Ghana’s economy.
“I will say that the resilience shown by the banking sector is due to the comprehensive financial sector reforms that took place before the Coronavirus pandemic. You can imagine what would have happened if the banking sector reforms wasn’t done. We would have woken up one day to see a collapse of the Ghanaian economy. The measures taken safeguarded the investments of 4.6 million depositors. There is confidence now in the sector. The exercise was crucial for stability and confidence in the financial sector” he said.
“I think Mensah Thompson doesn’t understand the issues in the banking space. I think we should commend the Bank of Ghana for rather being bold and courageous to undertake the banking sector reforms,” he stressed.