BoG in trouble, ‘suffering’ as much as Ghanaian investors are – Seth Terkper
Former Finance Chief, Seth Terkper, has noted that, the Bank of Ghana has been severely impacted by the Domestic Debt Exchange Programme (DDEP) just as Ghanaian investors have been.
According to him, the negative equity position and solvency policy issues currently facing the Central Bank are testament to the huge adverse impact of the DDEP on the Central Bank.
The central bank reported losses amounting to GHS 60.81 billion for the 2022 financial year, a significant contrast to the GHC1.23 billion profit recorded in 2021.
The losses were largely attributed to the government’s domestic debt restructuring efforts and the depreciation of the cedi, among other factors.
The BoG’s audited financial statement for 2022, released on July 28, revealed that as of December 31, 2022, the total liabilities of the central bank and its subsidiaries exceeded its total assets by GHC54.52 billion.
The GHS 60.81bn losses by the Central Bank have resulted in the apex bank recording negative equity and facing policy solvency issues.
Speaking in an interview on Joy News, Mr Terkper noted that the apex bank was caught up in the DDEP due to its constant financing of Government deficit, disregarding the law that stipulates that the BoG can only finance the Government’s deficit up to 5% of the previous year’s revenue.
According to him, the cap on BoG financing of Government deficit is needed to ensure that the BoG has a strong balance sheet to be able to safeguard the financial sector.
Speaking further, he noted that, Government’s debt to the BoG is so huge that, even in the absence of the domestic debt restructuring programme, Government would still not have been able to repay its debt to the BoG.
“Government continued to borrow and borrow from Bank of Ghana to the extent that, if you put the domestic debt exchange aside, right, government is unable to pay to the BoG.
“So the Bank of Ghana is also suffering like the individuals, and that is why the bank has now recorded negative equity (sic),” he stated.
According to the Bank of Ghana, given its huge losses and negative equity position, it may require recapitalisation from the Government.
