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BoG cannot be blamed for being forced into taking DDEP-induced haircuts – IEA on GH¢60bn loss

IEA John Kwakye Dr. John Kwabena Kwakye, Senior Economist and Director of Research at IEA

Tue, 15 Aug 2023 Source:

Director of Research at the Institute of Economic Affairs (IEA), Dr. John Kwakye, has opined that the Bank of Ghana cannot be blamed for being roped into government’s Domestic Exchange Programme (DDEP).

As a result of the DDEP, the Central Bank recorded an impairment loss of GH¢60.8 billion in 2022 with about 50 percent of the loss culminating from haircuts associated with the debt swap.

Making his submission on Citi TV ‘s Point of View programme on August 14, the IEA Director, however, said the Central Bank must be faulted for over-lending to government within the period.

“As central bankers, financing the government’s deficit is the most inflationary thing to do. That is why the central banks set lending limits to their governments. What has happened in our case [BoG] is that it looks like BoG went far beyond the sealing Act of last year’s revenue of 5%. We are told that they lent almost GH¢44 billion, and that is the magnitude. Once you do that, you are already getting yourself into serious trouble,” he is quoted by

“BoG over-lent to government and then you bring in this DDEP which qualifies us for IMF programme. And IMF compels BoG to be part of it. Out of the GH¢60.8 billion loss they have declared, GH¢53.1 billion is coming direct from DDEP. So, the question is will you fault them for that? We can fault them for over-lending to the government that is the problem, but why they were being forced to be part of the DDEP, is also another. That one, you can’t fault them for that,” the IEA Director explained.

Dr John Kwakye further bemoaned the International Monetary Fund for forcing the Bank of Ghana to partake in government’s DDEP before securing the approved $3 billion bailout.

“I also have a problem, why did the IMF force our central bank to be part of the DDEP? Just because they wanted us to meet the requirement for the ECF,” he expressed.

The economist also indicated that government must take full responsibility for the loss incurred by the Bank of Ghana as it failed to cut down on its expenditure.

“The blame, I think, should be at all various levels, first the government by causing all these deficits which require some financing. We have been calling on the government to try to live within its means”.

Meanwhile, the Minority in Parliament have been clamoring for the resignation of the BoG Governor [Dr Ernest Addison] and his deputies over they say is reckless mismanagement on the part of the Central Bank.


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