A survey conducted by the Bank of Ghana has revealed a general tightening of credit by commercial banks to both households and enterprises in the second quarter of the year.
The survey also shows further declines in net demand for credit by both households and enterprises.
Dr. Paul Acquah, Governor, Bank of Ghana who said this at the bank’s Monetary Policy Committee press briefing in Accra yesterday said banks have introduced additional loan covenants and collaterals as a measure of tightening credit.
“The net tightening was more pronounced for long term facilities than the short term.
In particular, the mortgage subsector, commerce and finance, transport and storage as well as services sectors witnessed significant reduction in credit allocation during the second quarter,” he said.
Provisional estimates of Deposits Money Banks(DBS) credit to the private sector and public institutions over the 12-month period to May this year he said increased by GH¢2,025.7 million (43.8 per cent) compared with GH¢1,699.9 million (58.0 per cent) recorded for the same period in 2008.
The private sector Dr. Acquah said accounted for GH¢1,649.8 million representing 81.4 per cent of the credit flow.
“Real annual growth of credit to the private sector was 19.1 per cent at the end of May 2009, a slowdown from 25.4 per cent for December 2008 and 36.9 per cent for May 2008,” he said.
Credit flow to enterprises he said accounted for 81.2 per cent of total credit flow to the private sector over the 12-month period to May 2009, up from 79.2 per cent at the end of March 2009 and 71.5 per cent for May 2008.
“The share of households eased to 17.1 per cent in May 2009 from 28.0 per cent in May 2008.
There was also a significant slowdown in the flow of credit to households during the period from 89 per cent a year ago to 33 per cent in May 2009,” he said.
Distribution of the annual credit flow Dr. Acquah said showed some shifts and reductions in certain key sectors.
The share of the services sector which accounted for 35.9 per cent at the end of December 2008, he said reduced to 24.8 per cent in March 2009, and further to 18.4 per cent in May 2009.
“Similarly, the share of commerce and finance reduced from 20.2 per cent in March 2009 to 16.5 per cent in May this year; manufacturing from 10.4 per cent to 9.3 per cent.
On the other hand, electricity, gas and water increased from 10.6 per cent in March 2009 to 11.4 per cent in May; and Agriculture from 5.1 per cent in March this year to 6.6 percent in May,” he said.
The remaining sectors he said recorded varying levels of increases in the flow of credit to the private sector ranging between 1.7 and 5.1 per cent.
The survey also shows further declines in net demand for credit by both households and enterprises.
Dr. Paul Acquah, Governor, Bank of Ghana who said this at the bank’s Monetary Policy Committee press briefing in Accra yesterday said banks have introduced additional loan covenants and collaterals as a measure of tightening credit.
“The net tightening was more pronounced for long term facilities than the short term.
In particular, the mortgage subsector, commerce and finance, transport and storage as well as services sectors witnessed significant reduction in credit allocation during the second quarter,” he said.
Provisional estimates of Deposits Money Banks(DBS) credit to the private sector and public institutions over the 12-month period to May this year he said increased by GH¢2,025.7 million (43.8 per cent) compared with GH¢1,699.9 million (58.0 per cent) recorded for the same period in 2008.
The private sector Dr. Acquah said accounted for GH¢1,649.8 million representing 81.4 per cent of the credit flow.
“Real annual growth of credit to the private sector was 19.1 per cent at the end of May 2009, a slowdown from 25.4 per cent for December 2008 and 36.9 per cent for May 2008,” he said.
Credit flow to enterprises he said accounted for 81.2 per cent of total credit flow to the private sector over the 12-month period to May 2009, up from 79.2 per cent at the end of March 2009 and 71.5 per cent for May 2008.
“The share of households eased to 17.1 per cent in May 2009 from 28.0 per cent in May 2008.
There was also a significant slowdown in the flow of credit to households during the period from 89 per cent a year ago to 33 per cent in May 2009,” he said.
Distribution of the annual credit flow Dr. Acquah said showed some shifts and reductions in certain key sectors.
The share of the services sector which accounted for 35.9 per cent at the end of December 2008, he said reduced to 24.8 per cent in March 2009, and further to 18.4 per cent in May 2009.
“Similarly, the share of commerce and finance reduced from 20.2 per cent in March 2009 to 16.5 per cent in May this year; manufacturing from 10.4 per cent to 9.3 per cent.
On the other hand, electricity, gas and water increased from 10.6 per cent in March 2009 to 11.4 per cent in May; and Agriculture from 5.1 per cent in March this year to 6.6 percent in May,” he said.
The remaining sectors he said recorded varying levels of increases in the flow of credit to the private sector ranging between 1.7 and 5.1 per cent.
