Because the redenomination of the Ghana cedi in 2007, the Financial institution of Ghana (BoG) has amassed losses totaling GH¢82.79 billion, in line with information compiled by JoyNews Analysis. This determine starkly contrasts with the central financial institution’s cumulative earnings of GH¢10.74 billion over the identical interval. The magnitude of those losses—greater than eight occasions the recorded earnings—factors to a systemic challenge that has lingered for some time.
The BoG maintained relative monetary stability within the early years following redenomination. Nevertheless, this trajectory modified in 2017, when the Financial institution recorded its first lack of GH¢1.6 billion throughout the interval beneath overview. The next 12 months (2018) noticed a short lived discount in losses to GH¢793 million. Nevertheless, in 2022, the Financial institution posted a historic and unprecedented lack of GH¢60.8 billion, largely attributed to the federal government’s Home Debt Alternate Programme (DDEP). The downward pattern continued in 2023, with a restated lack of GH¢13.23 billion, and most lately in 2024, with an additional GH¢9.49 billion in losses.
A serious contributing issue to the BoG’s present fiscal woes is the haircut it suffered throughout the DDEP, which was a key element of the federal government’s macroeconomic restoration framework negotiated with the Worldwide Financial Fund (IMF) beneath a $3 billion Prolonged Credit score Facility. The central financial institution’s holdings of presidency securities had been restructured, leading to sharp reductions of their worth and considerably impairing the Financial institution’s steadiness sheet.
Along with the DDEP-related losses, the BoG has confronted persistent challenges from international trade losses and the excessive prices related to Open Market Operations (OMO). In truth, the volatility of the cedi—pushed by inflationary pressures and exterior shocks—has contributed to web valuation losses on the Financial institution’s FX reserves. In the meantime, the price of liquidity administration by means of OMOs—vital to manage inflation and stabilize the cash market—has grown considerably in recent times, including to the operational deficits.
Because of these pressures, the central financial institution now finds itself able of adverse fairness, elevating issues about its long-term monetary viability. Present estimates counsel that the BoG would require roughly $5 billion to revive its steadiness sheet by means of recapitalization.
4 potential approaches have been tabled to revive the BoG’s capital base. These embrace: recapitalization by means of direct budgetary allocations from the Authorities of Ghana; transfers of state-owned belongings to the Financial institution; suspension of revenue transfers from the Financial institution to the federal government till fairness is restored; and the usage of fiscal buffers created beneath the continuing IMF programme.
Whereas these choices are into account, the federal government has already signaled constraints concerning its skill to assist a full recapitalization by means of the nationwide funds. Finance Minister Dr. Cassiel Ato Forson has made it clear that the state’s restricted fiscal house—compounded by excessive debt servicing prices, a big wage invoice, and substantial arrears—makes it almost not possible to fund your complete recapitalization from the funds alone.
The scenario presents a posh dilemma. A financially distressed central financial institution weakens the broader financial system’s resilience, undermines financial coverage transmission, and will hinder investor confidence in Ghana’s financial restoration framework. On the identical time, with the nation working beneath tight fiscal constraints, discovering a practical resolution that restores the BoG’s capital with out derailing macroeconomic stability stays a frightening process.
For now, though the Financial institution of Ghana continues to document losses, it’s benefiting from foreign exchange inflows by means of the GOLDBOD initiative and an improved remittance framework. These have strengthened its entry to international trade, permitting it to carry out key financial obligations extra successfully.
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