Prof John Gatsi calls for transparency in Bank of Ghana recapitalization process
Professor John Gatsi, Dean of the School of Business at the University of Cape Coast (UCC), has emphasized the need for transparency in the recapitalization of the Bank of Ghana (BoG).
Prof. Gatsi in a Facebook post on Thursday, July 4, 2024, noted that since the global financial crisis in 2007, recapitalization of central banks had become a necessary policy measure to address loss-making central banks, ensure financial stability, soundness, and consumer protection, and bolster confidence in regulation and the banking system.
He highlighted the importance of addressing negative net worth and losses to ensure the effective delivery of the monetary policy, price stability, and economic development mandates of the BoG.
He also stressed that a call for recapitalization is a significant responsibility for the BoG and its shareholders, necessitating a clear plan for achieving it and underscored the need for transparency, disclosures, and accountability, urging the BoG to publish details on the amount required for recapitalization, the timeframe for completion, the method of raising the required funds, the stakeholders involved, and the potential impact on the country’s fiscal situation.
Prof. Gatsi further pointed out that this should not be challenging for the BoG, as it is customary for universal banks to announce recapitalization plans, including the amount required and the completion timeline.
He argued that the memorandum of understanding between the BoG and the government signifies an intention to recapitalize and called for the BoG to disclose the specific amount involved, the methodology, and the deadline for the exercise.
In June 2024, the central bank announced plans to sign an MoU with the Finance Ministry following its significant losses for two consecutive years.
The MoU is a strategic move to help restore the financial health of the central bank and drive its positive equity position after it posted a GHS 10.5 billion loss in 2023 due to high expenditure related to monetary interventions and a GHS 60.9 billion loss in 2022 over impairments during the domestic debt exchange programme.
The MoU is to ensure that the Central Bank can continue with its mandate of managing monetary policy and ensuring price stability.
The recapitalization plan will look at the capital required, the timeline for recapitalization, and more importantly, the sources of funding.
