Bank of Ghana Annual Report 2008
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BANK OF GHANA ANNUAL REPORT 2008 Bank of Ghana annual RepoRt 2008 Bank of Ghana 1 annual Report and accounts 2008 ContentS Page Section 33 5.0 Major Internal Developments 33 5.1 Overview 2 Foreword by the Governor 33 5.2 IMPACt 05 project 3 Report of the non-executive Directors 35 5.3 ISo 27001 Certification 4 Board of Directors 35 5.4 Centre for training and professional 5 Organisational Structure Development 36 5.5 Human Resource activities 6 1.0 Governance 6 1.1 The Board of Directors 37 6.0 External Relations 6 1.2 Committees of the Board 37 6.1 Overview 7 1.3 Major Issues Considered by the Board 37 6.2 International Monetary fund (IMf) and 9 1.4 The Monetary policy Committee World Bank 37 6.3 West african Monetary Zone 10 2.0 Developments in the Global Economy 38 6.4 West african Monetary agency 10 2.1 World output Growth 38 6.5 West african Institute for financial and 11 2.2 Unemployment economic Management 11 2.3 General price level 38 6.6 Association of african Central Banks 11 2.4 Monetary policy Stance and Interest Rates 38 6.7 African export-Import Bank (afreximbank) 12 2.5 Foreign exchange Market Developments 39 6.8 High level forum on aid effectiveness 12 2.6 Commodities Market 39 6.9 Review of Sovereign Rating by Standard 13 2.7 Developments in Major Capital Markets and poor 13 2.8 Outlook for 2009 40 7.0 Financial Statements 14 3.0 Developments in the Ghanaian Economy 40 Corporate Information 14 3.1 Overview 41 Report of the Directors 14 3.2 Monetary policy and Inflation outlook 43 Independent auditor’s Report 15 3.3 Interest Rates Developments 45 Balance Sheet 16 3.4 Price Developments 46 Income Statement 17 3.5 Monetary Developments 47 Statement of Changes in equity 18 3.6 Real Sector performance and economic 49 Cash flow Statement activity 51 Notes forming part of the financial 20 3.7 Fiscal Developments Statements 20 3.8 External Sector Developments 24 3.9 External Debt Stock and Debt Service 88 Addresses and telephone numbers 25 3.10 Capital Market Developments 26 4.0 Developments in the Financial System 26 4.1 Overview 26 4.2 The Banking and non-bank financial System 27 4.2.1 Performance of the Banking System 28 4.3 Developments in the payments System 31 4.3.1 High and low Value payments 31 4.4 Central Securities Depository 32 4.5 Customer Complaints and Investigations 32 4.6 Financial laws 2 Bank of Ghana annual Report and accounts 2008 FOReWoRD By the GoVeRNOR Global financial and economic developments in the year under review, challenged policy-makers all over the world in a way that was unprecedented since the great depression, and Ghana was no exception. the extraordinary speed and severity of the contagion effects of third, the Bank facilitated the passage of three new laws, the turmoil that erupted in financial and capital markets, and dismal namely, the Borrowers and lenders act, non-Bank financial economic statistics and projections on output and employment Institutions act, and the home Mortgage finance act that stretched the capacity of monetary authorities, regulators, and should strengthen the regulatory environment for the governments to restore confidence in the workings of the economic development of the financial sector. Banks were required to system and international financial markets. Sharp energy and food implement a multi-year capitalisation programme to make them price increases and general volatility in commodity prices early less vulnerable to shocks and better able to support a rapidly in the year were already fostering destabilising expectations. growing economy. In Ghana, growth momentum carried into the year, with GDp rising fourth, the Impact ’05 project, a comprehensive to a record 7.3 per cent but under conditions of considerable computerisation of our information and data management and over-heating. at the same time, the economy was buffeted by processes, which went live in 2007, was painstakingly nurtured, inflationary pressures from several sources: the cost-price push and embedded in the way we do business at the Bank. from the energy supply shock and tariff adjustments; crude oil and food price increases and, most important of all, a surge fifth, to consolidate the IMPACt ’05 project, we initiated the in government expenditure (made possible in large part by the process of acquiring ISo 27001 certification in July 2008, to sovereign bond issue in September 2007 and divestiture of ensure that our information security and protection system Ghana telecom) in the run-up to the national elections. and we meets the best international standards. Certification has saw fiscal and external account deficits that were the largest subsequently been obtained, thanks to the hardwork of the staff. recorded in recent years in relation to GDp. the intellectual capital of the Bank remained central to our Indeed the inflation targeting regime of the Bank was severely human resource policy. the Centre for training and professional tested with rapid changes in inflation dynamics and Development (the Centre) was established in July 2008, and expectations. headline inflation and the Bank’s core inflation equipped with modern facilities to deliver coordinated and measure rose sharply above the single digit inflation target. coherent programmes for skills and career development of staff. also, the cedi experienced considerably more volatility and depreciation in the exchange market. finally, I should say that it certainly has been a very challenging year and one that offers significant lessons especially on how all this made it imperative that macro policies be re-focused fragile the economic and financial system could be, but also towards restoration of fiscal consolidation and strong stability resilient when well managed; and on the power of sound and oriented measures early in the year 2009, a stance adopted timely policy interventions in fostering confidence and stability. by the new administration. for all that we were able to do in these times; I take this for the Bank as an institution, the year 2008 was quite opportunity to thank the Board of Directors for their eventful as well and a landmark in its own way. professionalism, support, and dedication and, the staff for their commitment, invaluable contribution, and cooperation. first, the re-denomination exercise was formally rounded off successfully and on schedule. thank you. Second, we made significant advances in developing our payments system infrastructure with the introduction of the common electronic platform (e-zwich) and a biometric Paul A. Acquah smartcard for promoting branchless banking and financial Governor inclusion. Much of the work was completed on the Cheque Codeline Clearing system and the automated Clearing house which are key components of a state-of-the-art settlement system, placed under the management of the Ghana Interbank payments and Settlement System (GhIpSS). Bank of Ghana 3 annual Report and accounts 2008 REPORt OF THE NON-eXeCUTIVe DIReCTORS the year 2008 will be remembered for the global financial turbulence brought about by the excessive risk taking and leverage across markets in the developed world. this led to paralyses in much of the world’s financial systems and markets. the Ghanaian economy which had shown appreciable resilience the executive Directors consulted with us over several months when crude oil prices rose to unprecedented levels, was again on organisational changes in the Bank. the human Resource severely tested by the global financial crisis.t he non-executive and Corporate Governance Committees played a major role in Directors and the Board concluded that potential areas of this exercise, which resulted in several personnel changes and impact such as the equities market, bond market, export new appointments to further the policy goal of promotions receipts and remittances still showed signs of resilience during based on merit and experience. a new department was created the year. however, depreciation of the cedi against major to promote training and professional development in the Bank. currencies and a widening government budget deficit in an the Bank also continued the ISo certification process as a election year were major challenges to the Bank. naturally, the follow up to IMPACt 05. among several papers requested of the ability of the Central bank to handle its core goals of monetary Research Department by the economy and Research Committee policy and stability of the financial system came under intense were papers on ‘Management of oil Resources in Ghana’, scrutiny from both the government and the public. ‘offshore Banking and the prospects for the Ghanaian economy’ and ‘the Global food situation and its ‘Implication as the worldwide liquidity crisis continued, the non-executive for food prices in Ghana’. the papers were delivered to the Directors and Board received regular monthly reports on Board for consideration and policy briefs forwarded to the the evolving situation and took steps to mitigate the risks appropriate authorities. to the Ghanaian financial system.t he ability of the central bank to manage such a liquidity crisis in Ghana became the We welcomed the new Secretary to the Board, Mr. alex Bernasko subject of Non-executive and Board discussions. Indeed the who replaced Mr. James odei and also the re-appointment of non-executive Directors were extensively consulted on the Messrs KPMG as the external auditors of the Bank. risk-based supervision of the banks and were very supportive of Management’s decision on their recapitalisation in order the non-executive Directors congratulate the executives and to maintain financial stability.t he non-executive Directors Bank staff for their steady commitment to maintaining a stable also supported fully the Bank’s launch of the e-zwich financial system in these troubled times.