The Bank of Ghana’s unprecedented GHC 60 billion loss has been attributed by the central bank on the government’s Domestic Debt Exchange Program (DDEP) and COCOBOD loans.
The Bank of Ghana’s audited financial statement for the fiscal year 2022 indicated the large loss. The Central Bank reportedly recorded a profit of GH1.23 billion in the 2021 fiscal year before recording a deficit of GH60 billion the following year.
Dr. Philip Abradu-Otoo, Director of Research at the Bank of Ghana, highlighted that the losses were mostly brought on by the government’s controversial Domestic Debt Restructuring initiatives, devaluation of the local currency, as well as other causes, in an effort to explain the loss recorded by the bank.
Speaking on Citi TV in Accra, Dr. Abradu-Otoo claimed that the domestic debt restructuring had a negative impact on BoG’s operations.
“The central bank was making profits two-three years ago, last year, we made about GH¢1.2 billion of profits, but this year, it’s totally reversed and gone into a loss of GH¢60 billion. I don’t recollect BoG recording a loss in the past, this is the first time we are recording a massive loss. It’s a big deal,” the Director of Research noted.
“The reason for the loss is primarily due to the Domestic Debt Exchange Programme. Just as the banks suffered losses on their holdings of government instruments, the BoG also suffered a loss on its holdings of government instruments-marketable instruments and non-marketable instruments” he added.
Mr Abradu-Otoo added that “the impact of the DDEP on these two items, we incurred a loss of GH¢48.1 billion, we also had some loans to COCOBOD which were impaired as a result of the DDEP. DDEP impact that has swung our balanced sheet into negative territories”.
Dr. Abradu-Otoo expressed optimism, despite the development, that the government will give capitalization to help the central bank recover from the losses. He gave the Ghanaian public, in particular the financial sector, the reassurance that their funds are safe with the BoG and explained that the loss was not the result of poor judgment.
“What we are witnessing on the BoG balance sheets is directly related to DDEP, not to careless policy or poor judgment. Everything is secure; continue with your regular business, he reassured.