Fitch Solutions points out that the nation’s banking industry is at risk due to a significant non-performing loan (NPL) ratio of 21.8% and a Capital Adequacy Ratio (CAR) of 14.0%.
Fitch Solutions points out that this situation is due to the domestic debt exchange program (DDEP) and elevated interest rates.
In their report ‘US Tariffs Increase Risks for SSA Banks’, Fitch Solutions points out that Ghana exhibits the highest non-performing loans across the region’s ten leading Sub-Saharan African nations.
Despite this, SSA banks are typically in good shape, bolstered by strong capital adequacy ratios (CAR) and satisfactory loan quality, as Fitch has noted. However, Ghana’s CAR ranks as the third weakest on the continent.
Fitch believes that US trade tariffs will impact SSA banks in relation to monetary policy and thus expect banks to face increased uncertainty as policy expectations shift.
Fitch suggests that if interest rates stay high for an extended period beyond current expectations, it might negatively affect loan quality and expansion—possibly discouraging lending activities.
Conversely, an earlier-than-anticipated drop in interest rates due to worries about economic growth would have the opposite impact.
Although economists caution that U.S. President Donald Trump’s trade war is likely to hurt Americans more than it will any other country, its ripple-effect is being felt across the globe – and that is why Fitch Solutions is gauging its effect on sub-Saharan countries, particularly its banking sector.
Experts worry that imposing taxes on all imported goods could result in increased expenses for American companies. These firms might subsequently pass these higher costs onto customers through price hikes, potentially pushing the U.S. towards an economic downturn. Notably, J.P. Morgan has escalated its prediction of a worldwide recession by year-end from 40% to 60%.
President Trump has set out to boost U.S. manufacturing through his “reciprocal” tariffs, yet an economist from the ASEAN Studies Centre at the Singapore-based think tank ISEAS-Yusof Ishak Institute contends that American manufacturers and importers are likely to experience the initial impact of these measures.
When importers transfer part or all of the tariff costs to American consumers—which is quite probable—consumers may become more frugal. Various nations have quickly moved to negotiate with Trump, aiming to secure deals that could mitigate severe economic repercussions.
Provided by Syndigate Media Inc. (
Syndigate.info
).
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