Dr Ernest Addison, Governor of the Bank of Ghana has hinted of plans to undo all countercyclical measures implemented in the financial sector due to the COVID-19 pandemic to allow for the proper functioning of the system.

He has, therefore, charged banks to remain vigilant, upgrade staff capabilities and improve the governance and risk culture to avert any shocks and maintain the vibrancy of the sector.

"Over the next three years, in the aftermath of the pandemic, the Bank of Ghana will carefully unwind the countercyclical measures implemented and allow the financial system to function without the regulatory forbearance put into place due to the pandemic," he said.

Speaking at this year's University of Ghana Alumni lecture series, Dr Addison said the financial sector required a constant regulatory and policy attention to identify and mitigate emerging risks and to ensure financial stability.

He said the economic impact of the pandemic may result in higher non-performing loans and some capital erosion of banks, adding that the Central Bank was putting greater focus on identifying the early warning signals and initiating prompt corrective actions.

"The symptoms of a weaker bank are usually poor asset quality, lack of profitability, loss of capital, excessive leverage, excessive risk exposure, and poor governance conduct as well as liquidity concerns.

"In this respect, the Bank of Ghana will continue to strengthen all the regulatory measures implemented over the last three and half years to maintain confidence and safeguard financial stability," Dr Addison said.

He said the Central Bank was optimistic that with thE approach, a resilient and capable financial sector would weather the storms brought about by the pandemic and ensure the soundness of the industry.

Government, before the pandemic, initiated and implemented policies including the National Financial Inclusion and Development Strategy, the Digital Financial Services Policy, and the Cash-Lite Roadmap, with an overall objective of deepening financial inclusion and accelerating the shift to digital payments in the country.

Dr Addison noted that the momentous progress made in this area had significantly helped in the fight against the pandemic with an exponential growth in the volumes and values of the digital payment platforms in the country.

"Promoting financial technology had already been at the forefront of the Bank of Ghana's agenda and we will continue to invest in the supportive infrastructure, improve on the regulatory environment, as well as contain all the associated risks to help achieve financial inclusiveness and digital financial transactions to support the national objective," the Governor assured.

On the impact of the pandemic on the Ghanaian economy, Dr Addison explained that the Covid-19 external shock had partly reversed the progress made on the macroeconomic stability front.

He said so far, the fiscal costs, in terms of stimulus package deployed to moderate the adverse socio-economic consequences on households and businesses, was estimated at over GH¢11.2 billion.

"If you add the financial sector costs and the energy sector costs raises the estimate of the financial burden from these three sources alone to GH¢24 billion.

"As of half a year, it was estimated that the government paid GH¢4.7 billion in excess capacity payments in the energy sector. This has pushed the debt/GDP ratio above the threshold for the Market Access Countries," he said.