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Private Sector Attracts More Credit

Deposits Money Bank’s credit to the private sector and public institutions over the 12-month period to December 2012 has increased significantly by GHc3,673.1million representing 39.3%, up from GHc1,357.7million which was 17.0% recorded in December 2011.

A report from the Central Bank has revealed an outstanding credit at end-December 2012 which stood at GHc13, 025.5 million, of which, the private sector accounted for a share of 79.4 percent.  On year on-year basis, private sector credit grew by 34.1 per cent to Ghc11, 477.4 million representing 16.0% of Gross Domestic Product (GDP) in December 2012, compared to a growth of 26.3 per cent in December 2011 to GHc8, 560.9 million which was 14.4% of GDP.

In real terms, private sector credit grew by 23.2 per cent compared to 16.3 per cent in December 2011.  Sectoral distribution of the flow of credit to the private sector over the 12-month period to December 2012 show an increasingly more broad-based distribution with sectors such as services, manufacturing, commerce and finance and construction each absorbing over 10 per cent of the credit flow.

Private sector credit growth has meanwhile remained above trend for most part of 2012, with increased broad-based sectoral distribution and significant credit directed at the services, manufacturing and commerce and finance sectors.  Growth of Reserve Money (RM) inched upward in 2012 owing to a stronger than expected expansion of NDA of BOG.  RM growth at the end of 2012 was 36.0 per cent, up from 31.1 per cent in 2011.

The growth in RM was entirely from NDA expansion which was in turn driven by expansion of the net claims on government.  A seasonal unwinding of RM balances along with continuing strong monetary operations resulted in RM growth easing to 32.8 per cent in January 2013 notwithstanding a sharp rise in NFA, partly boosted by strong non-residents demand for government bonds, in contrast with developments over the same period in 2012 reflected in all of its component i.e. currency outside banks, DMBs reserves and non-bank deposits.

Source: Economy Times, Tuesday, 02, 2013