BoG Faces 45-Year Recovery Period Following Major Financial Losses In 2022 and 2023, Says Prof Bokpin
The Bank of Ghana (BoG) will require at least 45 years to recover from the substantial losses it incurred in 2022 and 2023, according to Professor Godfred Bokpin, an economist and Professor of Finance at the University of Ghana Business School (UGBS).
The central bank recorded a staggering GHS 60.81 billion loss for the 2022 financial year, primarily driven by the government’s domestic debt restructuring and the depreciation of the local currency.
In 2023, the BoG reported additional losses amounting to GHS 10.5 billion, attributed to rising interest expenses on its open market operations.
Speaking at the National Citizen’s Review and Feedback on the IMF-Supported Programme organized by the Economic Governance Forum on July 30, 2024, Professor Bokpin highlighted the central bank’s ongoing struggle to manage its costs, which he argues will significantly impede its financial recovery.
He noted that the average profits generated by the BoG over the past 15 years, even if sustained, would be insufficient to offset the massive losses without external assistance.
“The central bank’s inability to control costs is a major concern,” Professor Bokpin remarked. “Salary adjustments, travel expenses, and the construction of a new head office are areas where costs are not being effectively managed. Without substantial support and a rigorous recapitalization plan, the BoG will find it challenging to restore its financial stability.”
Professor Bokpin also suggested that the BoG might resort to monetizing infractions through fines to boost its revenue, but emphasized that this would not be enough to ensure a swift recovery.
He stressed the importance of viewing the leadership of the central bank as a national honor, urging those in charge to prioritize its long-term stability for future generations.
The BoG’s financial predicament underscores the critical need for strategic support and effective cost management to navigate the path to recovery.
As the bank of last resort, its financial health is vital for the broader economic stability of Ghana.
