Credit from banks to the public sector – government – for the 2020 fiscal year contracted by 27 per cent.
The contraction followed a rather huge growth of 84.58 per cent in credit to government in the preceding year – 2019.
The contraction in credit from banks to government can be attributed to fewer loans taken from banks in the country during the outbreak of the Covid-19 pandemic as the government looked to the Central Bank and multilateral institutions like the World Bank and the IMF for funds to tackle the pandemic.
Government during this period encouraged increase in credit to the private sector by banks to help businesses navigate through the adverse impacts of the Covid.
Despite an increase in credit to the private sector by some 5.75 percent in 2020, the growth contrasts sharply with that of 2019 when the increase in private sector credit stood at 23.61 percent.
The decline in credit growth was mainly driven by a slowdown in business activities due to the pandemic.
Outstanding credit to both the private sector and the public sector end-2020 according to Price Waterhouse and Coopers (PwC) stood at Ghs 47.7 billion.
Of the total amount, outstanding credit to the government – loans to be paid by the government to banks – is Ghs 4.2 billion. This is after the government made significant repayments for the year under review.
Outstanding credit to the private sector – loans to be paid by the businesses to banks – stood at Ghs 43.5 billion.
An increase of some Ghs 4 billion from the previous year’s total outstanding amount of Ghs 39.3 billion.
