A Senior Lecturer at the University of Ghana Dr. Lloyd Amoah, has said that the Bank of Ghana (BoG), just like all other central banks, cannot be bankrupt because it is not a commercial bank.
To him, the fiscal mess that the Bank of Ghana is being accused of creating, cannot be attributed to monetary prudence.
“The Bank of Ghana is not a commercial bank. Technically Central Banks cannot… be bankrupt,” he wrote on Facebook.
The Bank of Ghana earlier assured key stakeholders and the general public as a whole that the highest standards of prudent management, governance and transparent accounting and audit practices have been committed to.
The Bank said as a non-commercial bank, its financial outcomes have little implication on its operations.
“Technically, Central Banks cannot be insolvent or bankrupt,” it stressed in a statement issued on Wednesday, August 9.
His comments come at a time the leading opposition National Democratic Congress (NDC) issued a 21-day ultimatum to the Governor, Dr Ernest Yedu Addison, and his two deputies – Dr Maxwell Opoku-Afari and Elsie Addo Awadzi – to resign.
The NDC said all its Members in Parliament (MP) will within the period march to the head office of the Central Bank to demand the resignation of the Governor and the Deputy Governors.
“We have to get this Governor out and let us have a new Governor,” said Minority Leader Dr Cassiel Ato Baah Forson on Tuesday, August 8.
“If we allow him to stay in the office, we will set bad precedence for future managers to do the same.
“He has messed us so much that we cannot wait to see his back.”
This is as a result of the GH¢60.8 billion loss recorded in the 2022 Annual Report and Financial Statement of the Bank.
But in the statement on Wednesday, August 9, the Central Bank explained that it rather acted as a loss absorber for the country.
“It is important to put the Bank of Ghana’s 2022 financial results in proper context with a clear statement of the problem that Ghana faced and the chronology of events in Ghana since 2019.
“There was a clear mismatch between revenue inflows and expenditure financed in 2020 by
exceptional support from the IMF and World Bank resources, and in addition to financing from the Bank of Ghana through the issuance of the GHS10 billion Covid-19 bond.”
It continued: “As a result, sovereign spreads on Ghana bonds widened, signalling investor dissatisfaction with the stance of fiscal policy. The Budget for 2022, which was read in 2021, failed to address fiscal concerns as the Budget was even more expansionary by about 23% with a raft of revenue measures to raise financing.
“As a result, the Credit Rating Agencies further downgraded Ghana’s sovereign debt rating, which blocked Ghana’s access to international capital market borrowing.”
It said central banks across the globe recorded price and exchange rate movements which led to “a loss of GH¢5.2 billion whiles impairments of Cocobod loans amounted to GH¢4.7 billion”.
“This is the reason the Bank of Ghana reported a loss of GH¢60 billion in 2022.
“Central banks are not commercial banks. This financial outcome has very little implication for the operations of the Bank of Ghana as supported by evidence from other central banks.”