Bank of Ghana addresses Minority Caucus’ queries on 2022 financial statement
The Bank of Ghana has issued a detailed response addressing queries raised by the Minority Group in Parliament regarding its 2022 published annual report and financial statements. The Bank underscores the necessity of understanding the broader economic landscape to accurately interpret the reported figures, elucidating the contextual factors that have shaped its financial performance.
In the statement, the Bank contends that evaluating the 2022 financial performance in isolation from the prevailing economic circumstances could be misleading. Notably, the year 2022 marked the zenith of an economic and social crisis in Ghana, precipitated by a culmination of fiscal deviations and debt distress. This tumultuous period led to the nation losing access to both international and domestic markets, triggering credit rating downgrades and substantial currency depreciation.
The Ghanaian cedi witnessed a significant devaluation, surging from GHC6 to the dollar at the close of 2021 to nearly GHC13.1 by November 2022. It subsequently recovered to approximately GHC8.57 by December 2022, representing an annual average fluctuation of 30% and a total mean of 31.13%. In tandem, inflation surged from an average of 12.62% in December 2021 to an elevated 54.14% by December 2022. These economic tremors reverberated across all sectors, including the operations of the Bank of Ghana.
To provide clarity on the impact of these circumstances on its expenditure lines, the Bank presents specific examples:
- Vehicle Maintenance Expenses: Fuel costs, a principal element of vehicle maintenance, escalated by 123.3% in 2022 compared to a more modest 28.9% in the previous year. This surge was fueled by substantial increases in fuel prices, alongside other contributing factors such as insurance, currency fluctuations, and maintenance expenses.
- Communication Expenses: A significant portion of communication expenses was attributed to electronic data transmission charges, encompassing platforms like Reuters and Bloomberg, critical for reserve management and other core functions. Exchange rate volatility and inflation played a pivotal role in elevating these costs.
- Computer Expenses: The upsurge in computer expenses stems from the Bank’s strategic decision in 2022 to transition from desktop computers to laptops, bolstered by lessons drawn from the Covid-19 pandemic. The Bank’s adherence to a Business Continuity Policy fueled this transition, which, however, resulted in increased expenditure due to exchange rate fluctuations and inflation affecting hardware and software acquisitions.
- Foreign and Domestic Travel Expenses: The rise in these expenses was predominantly driven by exchange rate fluctuations and inflation impacts, rather than an uptick in the frequency of travels. The Bank clarified that staff’s visits to regulated institutions and branches, spread across the country, were essential regulatory duties.
- External Directors Expenses: This category encapsulates expenses related to running the Board secretariat, board training, and remuneration for external directors. These expenses were profoundly influenced by inflation and exchange rate fluctuations throughout the year.
Additionally, the Bank of Ghana addresses concerns surrounding waivers or write-offs, emphasizing that the Finance Minister’s 2023 budget statement, previously approved by Parliament, already encompassed the policy of debt restructuring. It underscores that International Financial Reporting Standards (IFRS) requirements for expected credit loss (ECL) implementation would trigger impairment charges, irrespective of parliamentary consent.
Lastly, the Bank’s decision to construct a new headquarters stems from a comprehensive structural integrity assessment of the current Head Office building, which has been deemed unfit for purpose and structurally compromised. Citing the strategic goal of positioning Ghana as a regional financial hub, the Bank deems a new Head Office building as pivotal to operational efficiency and future prospects as a host to potential regional central banking institutions.
