The International Monetary Fund has noted that even though the losses incurred by the Bank of Ghana in 2022 were largely due to the Domestic Debt Exchange programme, this did not relieve the Bank of Ghana from fulfilling its mandates as a Central Bank.

According to the Fund, the apex bank must ensure that the necessary policies are put in place to address the rising inflation and restore the country's macroeconomic stability.

The IMF said: “The Ghanaian authorities’ domestic debt exchange (DDE) is a key element of their plan to restore macroeconomic stability and public debt sustainability. The BoG is participating in the DDE to share some of the burdens the DDE places on government debt holders, along with banks, other financial institutions, pension funds, and individuals.

“The loss the BoG incurred in the process has contributed to reducing its net equity to a negative value. Importantly, however, this does not prevent the BoG from fulfilling its policy mandates and ensuring inflation gradually returns toward its 8-percent target. Indeed, central bank income is expected to be sufficient to cover monetary policy operational costs. The BoG’s net equity is expected to improve significantly over time and eventually return to positive territory,” it noted.

The Bank of Ghana incurred significant losses to the tune of GH¢60.8 billion in 2022 largely due to the DDEP.

According to the Bank’s 2022 Annual and Financial statements, the central bank’s holdings of government debt were restructured whereas non-marketable holdings of Government of Ghana instruments including long-term stocks, a Covid-19 Bond, and overdrafts were subjected to a 50 percent haircut.

Bank of Ghana’s other claims (holdings of marketable instruments) were exchanged under similar terms as other financial institutions under the DDEP.

This led to an impairment of GH¢48.40 billion in 2022. At the same time, the Central Bank incurred revaluation losses on its foreign assets and liabilities due to exchange rate depreciation.

The impairments and revaluation losses led to a negative equity position of GH¢55.12 billion for 2022.

SSD/NOQ

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