Bank of Ghana attributes GH¢60billion loss to govt debt restructuring and COCOBOD loans
The Bank of Ghana (BoG) has attributed its recent loss of GH¢60 billion to the government’s Domestic Debt Exchange Programme (DDEP) and COCOBOD loans, according to the institution’s audited financial statement for 2022.
This loss is in stark contrast to the previous year, where the bank achieved a profit of GH¢1.23 billion in 2021.
Dr. Philip Abradu-Otoo, the Director of Research at the central bank, explained in an interview with Citi FM said the losses were mainly caused by shocks from the government’s domestic debt restructuring activities and the depreciation of the local currency, among other factors.
He emphasized that this is the first time in the bank’s history that such a significant loss has been incurred.
“The reason for the loss is primarily due to the Domestic Debt Exchange Programme. Just like banks suffered losses on their holdings of government instruments, the BoG also suffered a loss on its holdings of government instruments—both marketable and non-marketable,” Dr. Abradu-Otoo stated.
He further added that the impact of the DDEP resulted in a loss of GH¢48.1 billion, and some loans to COCOBOD were impaired as a consequence of the restructuring program, leading to the negative swing in their balanced sheet.
“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”.
Despite the challenging situation, Dr. Abradu-Otoo expressed optimism that the government would provide capitalization to facilitate the central bank’s recovery from the losses. He reassured Ghanaians, especially financial institutions, that their funds deposited with the BoG are safe, emphasizing that the loss was not a result of bad decisions or reckless policies, but a direct impact of the DDEP.
“What were are seeing on the balance sheets of BoG is not as a result of reckless policy, or bad decisions but the direct impact from DDEP. All is safe, carry on with your normal businesses,” he assured.
The Bank of Ghana’s audited financial statement for 2022 was released on July 28, revealing that as of December 31, 2022, the total liabilities of the central bank and its subsidiaries exceeded its total assets by GH¢54.52 billion. The institution is now seeking measures to stabilize its financial position and ensure the safety of its operations moving forward.
source: graphiconline
