According to the Director of Research at the Institute of Economic Affairs, Dr. John Kwakye, the Bank of Ghana (BoG) recorded a loss of GH¢61 billion. This substantial loss is expected to prompt the regulator of the banking industry to scale back on some of its essential operations in order to save costs.
Dr. Kwakye expressed surprise at the response of the Minister of Finance, Ken Ofori-Atta, and the Governor, Dr. Ernest Addison, who downplayed the loss as only a “technical loss.” The impact of the Domestic Debt Exchange Programme (DDEP) has severely affected the Central Bank’s balance sheet, leading to a record negative equity of GH¢54 billion in 2022.
The consequence of this loss has been reflected in the country’s economic indicators, with inflation peaking at 54.1% in 2022 and the depreciation of the cedi ballooning to 54.2% in November 2022.
Dr. Kwakye reiterated that the magnitude of the loss is concerning, with inflation hitting an alarming rate before falling back to 30.0% in December 2022. Despite the defense made by Vice President Dr. Bwumia for the Bank of Ghana’s actions, Dr. Kwakye emphasized the inflationary impact of financing the budget through high-powered money from the central bank vault. He also noted that the Minister of Finance had expressed similar sentiments in the past, citing the direct benefit of the monetary financing to the government.
It is evident that the substantial loss incurred by the Bank of Ghana will have significant repercussions on its operations and underscores the need for careful management of the country’s fiscal and monetary policies.
