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Banks Credit To Private Sector Up By 51%   
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The Deposit Money Banks (DMBs) credit to the private sector and public institutions over the 12-month period to August 2012 increased significantly to GH¢4,128.7 million representing 51.1%, up from GH¢858.7 million which 11.9 percent recorded for the same period in 2011, according to the Central Bank.

The Outstanding credit at end-August 2012 was GH¢12,202.9 million. The private sector absorbed the bulk of the credit with a share of 84.1 per cent in total credit.

On year on year basis, private sector credit expanded by 43.7 per cent to GH¢10,814.2 million in August 2012, compared to a 22.1 per cent growth in August 2011. In real terms, private sector credit grew by 31.3 per cent compared to 12.7 per cent in August 2011.

Sectoral distribution of the flow of credit to the private sector over the 12-month period to August 2012 shows a generally increasingly more broad-based distribution with the services 21.2%, import trade 14.7%, commerce and finance 14.1% and manufacturing 12.9%.

Response of DMBs rates however was mixed. While the average 3-month deposit rate increased to 10.5 per cent in August 2012, from 7.8 per cent in December 2011, average lending rates declined to 24.5 per cent from 25.9 per cent in the same period. Thus, on a year to date basis, the lending-deposit spread narrowed to 14 per cent in July 2012, compared to 18.2 per cent in December 2011.

Base rate quotations for banks ranged between 12.4 per cent and 26.5 per cent in August 2012. On the average, bank’s base rates fell to 21.1 per cent in August from 25.9 per cent in May 2012, despite the policy rate hikes and increasing trend of rates on money market instruments.
Interest rates continued to trend upwards in the money market with a continued preference for medium to longer-dated instruments. Between December 2011 and August 2012, the rates on 91-day treasury bills rose to 22.7 per cent from 10.7 per cent, while 182-day bills rates moved to 22.9 per cent from 11.3 per cent.

The 1-year notes reached 22.5 per cent from 11.3 per cent as the 2-year fixed note rates rose to 23 per cent from 12.4 per cent. Similarly, the 3-year fixed bond increased to 24 per cent from 14 per cent, while 5-year bond went up to 23 per cent from 14.3 per cent.

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