Michael Dawson, a financial analyst, has defended the Bank of Ghana’s (BoG) decision to sanitize the banking sector as part of measures to restore banking sector stability.
He stated that the sector was on the verge of collapse, thus the decision by authorities to implement the reforms.
“I can tell you that some depositors did not receive their funds back from some financial institutions.”
“Some of the banks had also violated a number of banking regulations.” Indeed, the financial system was on the verge of total collapse at the time.
“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.
