The Bank of Ghana has reported significant losses amounting to GH¢60.81 billion during the 2022 financial year. This stands in stark contrast to the profit of GH¢1.23 billion achieved in the preceding year, 2021.
The considerable losses were attributed to various factors, including the government’s domestic debt restructuring activities and the depreciation of the local currency. As of December 31, 2022, the total liabilities of the central bank and its subsidiaries exceeded its total assets by GH¢54.52 billion, indicating a concerning financial situation.
The decline in the Group’s net worth position was attributed to the impact of the Domestic Debt Exchange Program (DDEP) and impairment of some assets of the Group.
This was specifically due to the Impairment of Government of Ghana securities holdings of GH¢48.45 billion which was occasioned by the DDEP; Impairment of loans and advances granted to Quasi-government and financial institutions amounting to GH¢6.12 billion; and the depreciation of the local currency resulting in net exchange loss of GH¢5.27 billion.
The report noted that the Board of Directors and Management of the Bank had assessed the policy solvency implications arising out of the negative net worth position and the Group’s ability to continue to generate enough income to cover its monetary policy operations and other operational costs.
“In the view of this, the Directors of the Bank will continue to operate on a going concern basis due to a variety of factors underpinned by expectations of an improved macroeconomic situation and policy actions specifically targeted at improving the balance sheet of the Bank of Ghana” the report highlighted.
Specific steps and actions to be taken to recover and build- back a positive equity include:retention of profits to help rebuild capital until equity firmly returns to positive region; and refraining from monetary financing of the Government of Ghana’s budget.
In this respect, action has already been taken with a Memorandum of Understanding on zero financing of the budget signed between the Bank of Ghana and the Ministry of Finance on 26 April, 2023.
The BoG is also taking immediate steps to optimize its investment portfolio and operating cost mix to bolster efficiency and profits.