Professor of Finance and Economics, Godfred Alufar Bokpin says the current ₵61 billion loss to the Bank of Ghana (BoG) projects the severe economic hardship Ghana has faced in the past few years.
According to him, the Central Bank can make profits and losses at any time and would not be too strange, but this particular loss is so unusual and raises a lot of valid concerns especially when the source is known.
“The source is largely coming from the Domestic Debt Exchange, the losses the BoG has booked is a reflection of what the economy has been going through the past one year.”
“When we look at the profitability trend of the Central Bank, it looks as though they’re more profit oriented than most of the universal banks, so BoG can make a loss or profit in its line of operation and that is understood.”
“But what we have seen in 2022 is an unusual development in our economy and that is why it raises legitimate concerns and especially when you come to understand the source of that loss, it makes it even more concerning,” he explained.
Speaking on Joy FM’s Super Morning Show, he added that signs of experiencing this loss and economic hardship were evident as far back as 2021 but that these signals were overlooked which delayed our point of action.
“Actually the signal was clear from the 3rd quarter of 2021, if you listen to the Governor of the Central Bank for the past two and half years, you will gather from his posture that he has been uncomfortable with the way the fiscal side is being managed.”
“And the transmission of that to how that was impacting monetary policy conduct, you can glean clearly from Bank of Ghana’s statements, press encounters and the rest of them,” he said.
However, the Bank of Ghana (BoG) has rejected claims that the GH¢61 billion losses it recorded in 2022 were a result of recklessness.
“What we 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.”
“We can say BoG policy has been suboptimal, suboptimal in the sense that we chose an action to save the economy from total collapse but as a result of the DDE, it has landed us here,” the Director of Research at BoG, Dr Philip Abradu-Otoo insisted.
The Central Bank has also assured that the ability to perform its regulatory function has not been affected despite its challenging financial position.
