Deputy Minister for Finance, Dr. John Ampontuah Kumah, has defended the Governor of the Bank of Ghana (BoG), Dr Ernest Addison and his two deputies in response to the National Democratic Congress (NDC)’s call for their resignations.
On August 8, the Minority Leader, Dr Cassiel Ato Forson, accused Dr Ernest Addison of reckless mismanagement of the Central Bank as it incurred a loss of GH¢60.8 billion from its audited financial statement for the 2022 fiscal year.
The Minority therefore issued a 21-day ultimatum for the resignation of the governor of the Bank of Ghana.
But Dr. Kumah has urged the public to disregard what he labeled as “funny propaganda” against both the central bank’s leadership and the entire government.
In a Facebook update on Wednesday, August 9, the Member of Parliament for Ejisu emphasized that the BoG is in a stable condition and is far from facing any potential collapse.
He explained that the primary revenue source for the BoG comes from government transactions. As a result, any reduction in such transactions would naturally impact the central bank’s income.
“Ignore this funny NDC Propaganda about the collapse of the Bank of Ghana (BoG). BoG is Solid!”
“The NDC is funny! It’s not true that a recapitalization levy is to be introduced for BoG, the Central Bank hasn’t collapsed.”
“The main source of income to the Bank is from government transactions i.e. fees on all government transfers, the bank’s investments in marketable instruments and also earnings from non-marketable holdings of the Bank.”
“Given that government transactions have gone down, naturally, the income of the bank will go down. Also, because of the debt restructuring, earnings on their holdings on markable and non-marketable bonds will go down,” he posited.
He added that “Beyond this, the Bank is solid and is capable of performing its core function. Article 183 clause 2 (c) of the 1992 constitution enjoins the Bank of Ghana to promote and encourage economic development in the country, hence there is nothing untoward in the actions of the Central Bank to support the state in its economic recovery efforts.”
The Deputy Minister also implied that the losses incurred by the central bank are not uncommon, as many central banks globally experience similar situations while pursuing economic stabilization goals.
Bank of Ghana’s response
The substantial loss of GH₵60 billion included a significant portion of GH₵53.1 billion attributed to the government’s Domestic Debt Exchange Programme (DDEP), as per a Bank of Ghana’s report.
The Bank’s statement clarified that its intervention was necessary to avert a significant economic and societal crisis due to the failure of the domestic auction process.
Furthermore, the Bank of Ghana outlined that a deeper decline in Ghana’s sovereign debt rating resulted in the restriction of the country’s access to international capital market borrowing. This, in turn, triggered a liquidity crisis, which subsequently escalated into a balance of payments crisis.
It added that “In 2 months, the Bank of Ghana lost $500 million in reserves and built significant overdraft with the government as a result of the auction failures.
“It became clear that Ghana was on an unsustainable path, and the Government had to approach the IMF for support in July 2022.
“The IMF process included putting into place a credible programme of reform, which included restructuring the total government debt to sustainable levels.
“Until the Staff Level Agreement with the IMF was reached in December 2022, the Bank of Ghana had to continue to provide the necessary support to keep the economy running.”