Financial Sector survives Global Financial Crisis

The effects of the global meltdown has had terrible impact on low income economies, the impact, through the financial sector has been quite slow, because of a weak integration with the global financial market, the Central Bank of Ghana has observed.

This limited exposure of the banking sector of the region, has enjoyed a relatively strong performance, which is supported by improved macroeconomic stability and legislative reforms, while resulting in the implementation of revised prudent guidelines and risk management frameworks.

Analysis has also shown that the slow reaction in these economies of the region, was largely due to the fact that low economies have limited exposure of their economies to toxic assets that have precipitated, and also spread the crisis in the international financial systems.

The Governor Bank of Ghana, Dr. Paul Acquah in his observations on the global financial crisis said, so far as the financial crisis continue to deepen, the region would be witnessing a fall in export revenues, declines and reversals in capital flows in stock, and money markets fuelled by speculative and increased volatility on foreign exchange markets.

Some predictions he made were that external shocks would be creating budget crises in developing countries, as the low fiscal and current account deficits, created through the long period of successful reforms, were now being widened. “Current account deficits are projected to worsen in a number of oil-exporting countries between 2008 and 2009, with some countries moving from surpluses to deficits. The impact of the crisis on the current account balances has been more pronounced in non-oil producing African countries.”

The Governor of the BoG made these observations at the opening ceremony of a regional forum on the global financial crisis for legislators, which was organised by the West African Institute for Financial and Economic Management (WAIFEM), in Accra. Representatives from Ghana, Nigeria, Liberia, The Gambia and Sierra Leone levelled on how to strengthen the capacity of legislators to play their roles more effectively in enacting appropriate legislation geared towards the realisation of national development goals, within the current globalised economic environment.