The assertion that the Bank of Ghana (BoG) is insolvent is not only false but also misleading. Dr. Frank Bannor, an economist and Senior Research and Policy Analyst at CDS Africa, has stated:
Dr. Bannor explained that the primary objective of central banks is not to generate profits, but rather to engage in a variety of activities for the advancement of the nation.
In 2022, the Bank of Ghana incurred a loss of GHS60,6 billion.
This is due to the impairment of the Government of Ghana's securities holdings totaling 48.45 billion, the impairment of loans and advances granted to quasi-government and financial institutions totaling 6.12 billion, and the depreciation of the local currency resulting in a net exchange loss of 5.27 billion, according to the Bank.
The deficit was caused by the Domestic Debt Exchange Programme of the Government of Ghana.
According to the BoG, its Board of Directors and Management evaluated the policy implications of the negative net worth position and the group's ability to continue generating sufficient income to cover its monetary policy operations and other operational expenses.
In the opinion of the board of directors, the Central Bank will continue to operate as a continuing concern due to a variety of factors, including the anticipation of an improvement in the macroeconomic environment and policy actions aimed specifically at improving its balance sheet.
In its Annual Report, the Central Bank enumerated the steps it believes will aid in its recovery.
These include the retention of profits to aid in the reconstruction of capital until equity returns to a solidly positive region.
Refraining from financing the Ghanaian government's budget with money.
In this regard, the Bank of Ghana and the Ministry of Finance signed a Memorandum of Understanding on negative budget financing on April 26, 2023;
Taking immediate action to optimise the Bank of Ghana's investment portfolio and operating cost composition in order to increase profits and efficiency; and
Assessing the prospective need for government recapitalization assistance in the medium to long term
In addition, the Board of Directors and Management are of the opinion that "continued efforts to restore macroeconomic stability and debt sustainability, along with long-term efforts to build reserves, provide sufficient foundation for continued operational policy efficiency for the foreseeable future."
Dr. Kojo Aboagye-Debrah, an Economist and Banking Consultant, stated in response to this report that the BoG would need to restore its capital due to the loss it sustained.
He suggested that the restoration process should be overseen by Parliament to ensure sanity, stability, and confidence.
This will be the appropriate action for the central bank to take in order to prevent further losses, he said.
"Parliament should oversee the restoration of the capital.
For the time being, we require a transition in terms of a supervisory role for the restoration of capital because the Bank of Ghana mandates it. Given the opinion of the auditors, I believe it will be appropriate to ask a third party to serve in a transitional capacity; however, this does not imply that we are removing their autonomy.
" he said on TV3's Business Focus on July 31 in response to reports of the BoG's loss of GHS60,8 billion.
In response to the BoG's losses, Dr. Bannor issued the following statement: "To assert that the Bank of Ghana is insolvent is not only misleading, but also false.
The assertion that the Bank of Ghana is insolvent is not only deceptive but also false.
Again, the assertion that the Bank of Ghana is experiencing a loss for the first time in roughly 50 years is false.
The Central Bank of Ghana reported an impairment position of 404 million in 2016, according to its 2017 annual report.