IMF offers clarification on the GH60 billion loss by the Bank of Ghana
The Bank of Ghana (BoG) suffered a GH60 billion loss during the 2022 fiscal year. The International Monetary Fund (IMF) has addressed these issues and stated that there is no cause for fear.
Due to the significant loss it suffered, the BoG has been under increased scrutiny from opposing political groups and civil society organizations. On Tuesday, the minority leader, Dr. Cassiel Ato Forson, demanded the resignation of the governor, Dr. Ernest Addison, and his appointees, blaming the losses on carelessness at the central bank, an accusation that the BoG rejected.
The BoG’s involvement in the Domestic Debt Exchange Programme (DDEP), a key component of the government’s plan to restore macroeconomic stability and public debt sustainability, has since been explained in full by the IMF on its official website.
According to the IMF, the BoG’s participation in the DDEP was meant to divide the program’s burden among multiple parties, including those who hold government debt, financial institutions, banks, pension funds, and private individuals.
According to the IMF, the incurred loss was a factor in the BoG’s net equity declining to a negative amount.
The IMF emphasized that the BoG’s capacity to carry out its policy mandates and implement steps to progressively steer inflation towards its 8-percent target is unaffected by this circumstance.
The IMF expressed confidence that the income of the central bank would be sufficient to pay for operational expenses associated with monetary policy.
As a result, the IMF anticipates that over time, the BoG’s net equity will significantly improve and finally turn positive.
The IMF’s post about the BoG’s losses is below.
What are the ramifications of the Bank of Ghana’s (BoG) losses from the government’s domestic debt exchange?
A crucial component of the Ghanaian government’s strategy to reestablish macroeconomic stability and public debt sustainability is the domestic debt exchange (DDE). Along with banks, other financial organizations, pension funds, and private citizens, the BoG is taking part in the DDE to share some of the burden it lays on holders of government debt.
Reducing the BoG’s net equity to a negative value was aided by the loss it suffered during the procedure. However, it’s important to note that this does not hinder the BoG from carrying out its policy mandates and making sure inflation steadily moves back toward its target of 8%. In fact, it is anticipated that central bank earnings will be adequate to cover the costs associated with monetary policy. Over time, it’s anticipated that the BoG’s net equity will increase dramatically and finally turn positive.
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