Professor John Gatsi, the Dean of the Business School at the University of Cape Coast (UCC), has criticized the Bank of Ghana (BoG), stating that the central bank cannot blame the issues faced by other central banks for its own financial losses.
According to Professor Gatsi, the challenges that affected other countries’ central banks are different from what BoG experienced.
He highlighted that before the Covid-19 outbreak, the BoG was lending to the Central government in excess of its regulatory requirements, which constituted a breach.
He explained, “The Bank of Ghana cannot seek refuge in that. The reality is that the loss it incurred is not caused by the same factors that affected the Bank of England, for example, or the central bank of the Netherlands, or even the central bank in the US, which limited some of its activities. The BoG’s loss can be attributed to its lending in excess of regulatory requirements to the central government for about three years prior to Covid.”
In response to questions about the GHS60.8 billion loss, the Bank of Ghana released a statement stating that other central banks were also experiencing losses.
The BoG attributed its significant loss to the government’s Domestic Debt Exchange Programme (DDEP) and loans to COCOBOD, as revealed in its audited financial statement for 2022.
Dr. Philip Abradu-Otoo, the Director of Research at the central bank, explained that the losses were mainly a result of shocks from the government’s domestic debt restructuring activities and the depreciation of the local currency, among other factors.
He highlighted that this marked the first time in the bank’s history that such a significant loss had occurred.
The impact of the DDEP contributed to a loss of GH¢48.1 billion, and certain loans to COCOBOD were impaired due to the restructuring program, resulting in a negative swing in their balance sheet.
Despite the challenging situation, Dr. Abradu-Otoo expressed optimism that the government would provide capitalization to aid the central bank’s recovery from the losses.
He reassured Ghanaians, especially financial institutions, that their funds deposited with the BoG are secure, emphasizing that the loss was not a result of bad decisions or reckless policies but a direct impact of the DDEP.
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