Dr. Ernest Addison, the governor of the Ghanaian central bank, has emphasized that the bank exists solely for the benefit of the nation and not for personal gain.
He claimed that the bank might continue to be a useful tool for national management even if its equity position was negative.
In a press conference that 1Family Radio covered, Dr. Addison stated that the bank’s reliability should be determined by its capacity to carry out its primary objective, which is to implement policies that will improve the balance of payments, the condition of public finances, and the overall growth of the national economy.
“It is important that we place the central bank’s policy mandate ahead of profits,’’ he noted.
He asserted that the reported losses were just technical, the result of a haircut, and the application of accounting principles to determine probable credit losses over the duration of the public debt owned by the Bank of Ghana.
“It is not money lost by the Bank of Ghana through its operations in 2022. Rather, one should look at this as a reflection of the total cost of the economic and social crisis the country faced over the years and an attempt to resolve a major structural problem of the Ghanaian economy.’’
You will recall that in 2017 and 2018, the Bank of Ghana incurred similar negative equity from the impairment of legacy liquidity support loans granted in 2015 and 2016 to insolvent banks, which our external auditors impaired due to the doubtful prospects of recovering from those insolvent banks.’’
“The central bank, however, recovered and generated profits throughout the period from 2019 to 2021.’’
He went on to say that the government experienced a liquidity issue that the central bank had to help solve with a crucial financing gap when it ultimately lost accessibility to the foreign capital market for new financing.
“Throughout the first half of 2022, there was no new foreign financing until July, when the Afrexim Bank stepped in to provide support with US$750 million.’’
“The debt included all the legacy debts of the government of Ghana dating back to 1992 and included the accrued overdraft of 2022, the overdraft to Cocobod, the Cover-19 Bond, and even BoG holdings of Telecom Malaysia (Ghana Telecom Bonds) and Tema Oil Refinery (TOR) bonds issued by the government. As of 2015, the accumulated claims on the government and Cocobod were about GH13 billion.’’
“The debt, therefore, is not about recent debt alone. Almost all lending from the IMF, including the Extended Credit Facility and the Rapid Credit Facility during the COVID-19 pandemic, and all financial sector resolution bonds have all been added as Bank of Ghana lending to the government,’’ he said.