Ghana monitoring euro banks downgrade to remove reserves
The Bank of Ghana (BoG) says it is monitoring the downgrades suffered by some banks in the Eurozone especially where the country keeps some of its reserves and resources.
Some banks in the Eurozone have been downgraded and others are seeking bailouts, as recently seen in Spain.
In a move not to allow Ghana’s reserves to be at risk, the BoG Governor, Kwesi Amissah-Arthur told a press conference in Accra June 13, 2012 that the central bank is reading downgrading reports of some banks in the Eurozone and the central bank will remove its reserves in those banks if these are downgraded or are found to be in danger.
“We are holding some of our reserves and nostro balances with some of these banks…We read reports very carefully and anytime we find a bank downgraded or in danger, we are looking at whether we have some money sitting at those banks and how we can get it out quickly,” Amissah-Arthur told journalist.
He hoped the euro does not die because the West Africa Monetary Institute (WAMI) is “trying to emulate the euro”.
In a press release, the BoG Monetary Policy Committee (MPC) noted that that challenges in the Eurozone continue to pose threats to the global economic outlook and there are substantial downside risks to growth due to the austerity measures being implemented in parts of the zone.
In a report issued recently, the World Bank says it expects a long period of volatility in the global economy as the Eurozone debt crisis escalates. The report warns developing nations to expect weak growth and tough times and urges countries to take adequate long-term measures to ensure that economic growth can be sustained.
Like other countries which rely on the export of primary commodities, the MPC stated that Ghana’s economic prospects will be “determined by the restoration of growth in the advanced and emerging economies, especially the Eurozone and China”.
Mr Amissah-Arthur warned that the demand for commodities in the Eurozone is low and Ghana’s foreign exchange earnings could be affected.
Ghana’s export receipts from gold amounted to $2.7 billion, cocoa beans were $1.6 billion, while crude oil was $1.2 billion during the five months of 2012, according to the BoG. Other exports, including non traditional, amounted to $768.2 million.
The country’s foreign reserves fell to $4.3 billion as at June 8, 2012 from $5.4 billion in December 2011, the central bank said.
The BoG said the country’s $5.4 billion gross reserves is equivalent to “2.5 months imports cover” of goods and services.
By Ekow Quandzie