20 March 2020 – Bank of Ghana announce further monetary measures to protect economy

Type of Intervention: Advisory, Financial Support, Regulation, Stimulus, Additional Measures by the Bank of Ghana in response to the COVID 19 Pandemic: 20th March 2020 as a follow up to the measures released on 18th March 2020:
Sectors Involved: Central Bank, Finance/Economy, Manufacturing and Industry
Level of Jurisdiction: National
Lead People/Agency: Bank of Ghana, Sandra Thompson (Secretary of Bank of Ghana)

Overview: This advisory is on additional measures by the Bank of Ghana released on 20th March 2020 as a follow up to the measures released on 18th March 2020:
The directive includes:
a. Reduction of the Primary Reserve Requirement from 10 percent to 8 percent to provide more liquidity to banks and SDIs to support critical sectors of the economy
b. The reduction of the Capital Conservation Buffer (CCB) for banks from 3 percent to 1.5 percent to provide the needed financial support to the economy;

c. The reduction of provisions for loans in the “Other Loans Especially Mentioned” (OLEM) category from 10 percent to 5 percent for all banks and SDIs as a policy response to loans that may experience difficulty in repayments due to slowdown in economic activity

d. Loan repayments that are past due for Microfinance Institutions for up to 30 days shall be considered as “Current” as is the case for all other SDIs

e. Banks and SDIs are to refrain from declaring and paying dividends or making other distributions to shareholders for the 2019 financial year unless the Bank of Ghana is satisfied, that the institution meets the regular prudential requirements and is not relying on the additional liquidity released by the policy measures enumerated above to pay shareholders.

f. Banks and SDIs are to desist from utilising the released liquidity based on the above policy interventions, to purchase Government of Ghana and Bank of Ghana Securities.

Full details here: https://www.bog.gov.gh/wp-content/uploads/2020/03/Notice-No-BG-GOV-SEC-2020-01-Guidance-on-the-Utilisation-of-Capital-and-Liquidity-Releases-to-Banks-and-SDIs.pdf

Other links: 1
Type of Justification: Advice of INTERNAL government advisory committee or group, Advice of EXTERNAL expert advisor or advisory committee
Source of Evidence or Justification: National – academic, Ghana Health Service,Presidential Address on COVID 19: Updates 1- 4), International Capital Market Association,
Evidence/Justification:
The increase in the spread of COVID 19 and the WHO advisory or Social distancing and other safety etiquette, coupled with the increase in COVID Cases in Ghana and the presidents call for social distancing. the intervention is a stimulus package to cushion small scale industries, micro-finance companies etc.