Is BoG looking at reserves on a gross basis? – Prof Bokpin questions empty reserves

An Economist, Prof. Godfred Bokpin, has questioned the facts and figures that have been presented by the Bank of Ghana regarding the country’s reserves and current fiscal position.

According to him, this will not be the first time the Central Bank has published inaccurate and reliable.

His comments come after the 2023 International Monetary Fund Regional Economic Outlook Report (Sub-Saharan Africa) showed that Ghana’s net international reserves are expected to end in 2023 at approximately three weeks of import cover (0.8 months).

“Of course, we know that when it comes to our international reserves, it is not the first time. In fact, in 2014, the Central Bank had a dispute with the international community as well as the IMF because, in 2014, our reserves on a net basis could only cover two weeks of imports…only two weeks.

“Meanwhile, the Bank of Ghana had data that suggested we could do more than one month…you can check the data, and the explanation then – and I believe it will not vary now,” he was quoted by myjoyonline.

He said it would be more appropriate to know on which basis the Bank makes its analysis.

“Is it that probably the Bank of Ghana is looking at reserves on a gross basis?” Professor Bokpin questioned.

He added, “When they [reserves] also include the heritage fund and all of that, and probably the Fund [IMF] will be looking at reserves on a net basis and also in terms of the denominator they are looking at both imports of goods and services”.

Prof Bokpin intimated that the financial market depends on data, therefore the BoG must ensure its data is correct.

“The other bit is to look at the Bank of Ghana’s own official exchange rate. You can’t refer to that rate as a transactional rate because the dollar is not clearing at that particular rate.

“So, when we do all these things, we are actually not helping the market because one important function of the market is price discovery,” he added.

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