Attack on BoG leadership over GH₵60bn loss needless – Ofori-Atta
The Finance Minister, Ken Ofori-Atta, has emphasized that the primary objective of the Bank of Ghana, like all central banks, is not to generate profit.
In an article titled “Standing Strong With The Bank of Ghana,” he addressed the importance of managing the central bank as a financially sustainable institution, rather than focusing solely on profitability.
The article comes in response to plans by the minority caucus of parliament to protest against Dr. Addison, accusing him of mismanaging the central bank, resulting in a loss of GHS60.8 billion in 2022 and negative equity of GHS55.1 billion.
The minority is also concerned about the bank’s decision to write off a GHS48.40 billion debt owed by the Akufo-Addo government without parliamentary approval, as well as the allocation of GHS250 million for the construction of a new
But Mr Ofori Atta in his article states that “In fact, as some critics of the Central Bank in our country do observe, the primary objective of a central bank is not to make a profit but to be managed as a financially sustainable institution”, Mr Ofori-Atta wrote in an article titled: ‘Standing Strong With The Bank of Ghana’.
“We must, in these extraordinary times…deploy all the instruments we have available and sail together through this odyssey,” the Finance Minister, Ken Ofori Atta wrote in an article titled “Citizens – Standing Strong with the Bank of Ghana.”
“The call for us, as citizens, is not to be seen as punishing the Bank of Ghana for pitching up to support the greater public good!”
“It is probably a good time to recall the wise words of the late Professor P.A. V Ansah that even as we educate and inform, we must foster national cohesion because ‘…national cohesion is the foundation upon which any and everything is built’”.
He asserted that the government’s debt operations that commenced in 2022, and were executed this year, “has had a significant impact on Bank of Ghana’s balance sheet while reducing the amount of money spent on interest payment Exchangegovernment”. “As of 2022, the central bank held about GHS42.3 billion of government’s domestic debt, out of the total (domestic) debt stock of GHS194.3 billion”.
This debt holding, Mr Ofori-Atta explained, “in addition to others, resulted in a loss impairment provision of about GHS48b for the Bank in 2022”.
He said, as indicated by the IMF, the BoG was “the loss absorber for the debt exchange to ensure that in light of the concessions to other domestic bondholders, its burden share of the debt exchange will enable the economy to still achieve the overall objectives of the Exchange – the Domestic Debt Exchange Programme will ensure the NPV of the stock of public sector debt is halved from the then 105 percent of GDP (later recalculated as 89%) to 55 per cent of GDP by 2028, thereby putting the country on a sustainable debt trajectory”.
He said as indicated by the Board of Directors of the Bank in their 2022 annual reports, “all efforts will be made to restore the balance sheet of the Bank in the medium term, continue to improve the efficiency of their operations, and resort to the government for recapitalisation over the medium to long term if necessary”.
He said: “There is, therefore, no need for a direct attack on the leadership of the central bank.”