Due to the Oversubscription of Government Bonds, Several Institutions May Soon Face Difficulties -Data and Research Analyst

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Ghana’s banking industry has been portrayed in a negative light in a fiscal study written by Data and Research Analyst Isaac Kofi Agyei and Banking Consultant Dr. Richmond Atuahene, who blamed the oversubscription of government bonds for their findings.

The paper, titled “Thirsty Banks: Ghana’s 2023 Challenge with High Cash Reserve Ratios,” identifies a number of banks’ major concerns as a result of the government bonds’ extended maturity period, which is set until 2031.

There is a chance that the Banks’ resources will be exhausted as a result of this prolonged waiting period, leaving them with inadequate liquidity for regular business operations.According to the study, a significant share of the GH¢224 billion in total deposits made by commercial banks have gone towards buying government bonds as a result of the domestic debt exchange plan.According to the report, “it amounts to double accounting if the Bank of Ghana did not take into account the GH¢50.6 billion of restructured bonds before implementing the new, higher Cash Reserve Ratios.” The government bonds’ final maturity date is in 2031, and a lot of bank boards and management teams are worried that this new mandate would cause their resources to run out quickly because a lot of banks might not have enough liquidity to run.

This extended waiting period raises the possibility that the Banks’ resources will run out, leaving them short on funding for normal business operations.The study claims that as a result of the domestic debt exchange scheme, a sizeable portion of the GH¢224 billion in total deposits made by commercial banks had been used to purchase government bonds.According to the analysis, “it amounts to double accounting if the Bank of Ghana did not take into account the GH¢50.6 billion of restructured bonds before implementing the new, higher Cash Reserve Ratios.” Many bank boards and management teams are concerned that this new objective will result in their resources running out rapidly because the government bonds’ final maturity date is in 2031.

NWN GH

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