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Bank of Ghana is not bankrupt,” Bernard Otabil responds to Ayariga.

Written by on July 10, 2024

Bernard Otabil, the Director of Communications of the Bank of Ghana (BoG), has dismissed allegations that the central bank is bankrupt.

His statement follows the minority’s announcement of a second planned protest against the bank’s governors, accusing them of mismanagement and insolvency.

In a statement seen by Citi News on Wednesday, Mr. Otabil emphasized that central banks globally have incurred losses in their efforts to maintain price stability.

“Central Banks all over the world are registering negative equity and this does not mean they fold up and cease operations. Ours is the provision of public good, therefore we place purpose over profit. This is the story of central banking.”

“The Bank of Ghana is policy solvent and not bankrupt as it has been touted. In fact, the Annual Report and Financial Statements (2023) released a few months ago provides an elaborate explanation on the Bank’s policy solvency. In 2023, fighting inflation, that is reducing inflation from 54.1 per cent at the end of December 2022 to 23.2 per cent at the end of December 2023 came with a cost of more than GHS8 billion, contributing to the loss in that year. In 2022, the Domestic Debt Exchange Programme was the bane of the financial position.”

He further explained that if the BoG had not absorbed the hit, all the pension funds in the country would have been wiped out.

He added, “BoG is the only institution that can absorb those losses and correct it over time.”

Addressing the issue of costs incurred by the Bank, Mr Otabil explained that the bank engages in strategic planning spanning several years. He said, “Every year, Departments draw up their activities for the following year and it is costed, and captured in the budget, which becomes the operational blueprint.”

“There are budgetary hearing processes, and the Board sub-committee reviews them, and the final budget is presented for Board approval. All activities undertaken are budgeted. And in the area of procurement, all the PPA processes are followed.”

On the Bank’s deficit, Mr Otabil clarified that the IMF and all international bodies were aware that the bank would run a deficit for a few years before the situation was corrected.

He concluded by saying, “The proposed government recapitalisation only has to do with the direct impact of the DDEP, which was necessary to access the IMF programme. Government recapitalisation will not be done in a single year. It will be done over a period of time in order not to negatively impact the fiscal space created.”

“These are technical matters and the Bank is ready to provide further education on it, even through a workshop. There are no hearsays here but issues of fact. The Bank is committed to maintaining stability in the general level of prices to improve the living standard of all Ghanaians.”

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