Allocation of funds to government securities by banks in the country, saw a significant decline by some 16.8 percentage points at the end of the third quarter of 2020.
Bank funds allocated to government securities decreased from 43.4 per cent in the third quarter of 2019 to 26.6 per cent in the corresponding period of 2020.
According to data contained in the Bank of Ghana’s (BoG) Q3 2020 Quarterly Bulletin, the diversion of bank funds from government securities especially investments in short-term bills to investments in foreign and ‘other’ assets increased to 2.9 per cent and 35.3 per cent in Q3 2020 from a previous 2.0 per cent and negative 1.0 per cent in Q3 2019 respectively.
The BoG in its Quarterly Bulletin however, failed to highlight the ‘other’ assets to which funds where diverted to from government securities.
Investment in short term government securities, the BoG noted decreased from 24.76 percent to negative 3.4 percent while investment in medium to long-term Government instruments increased from 18.8 percent to 30.1 percent over the same comparative periods.
Funds allocated for bank credit – funds made available to businesses and households in the form of loans – decreased from 37.2 percent in the third quarter of 2019 to 19.1 percent in the third quarter of 2020, which is also lower than the 23.6 percent recorded in the second quarter of 2020.
The proportion of bank funds allocated to balances with the BoG also decreased from 18.4 percent to 16.07 percent for the period under review.
