The head of the New Patriotic Party, Dr. Mahamudu Bawumia, has come under fire from Dr. John Kwakye, the Director of Research at the Institute of Economic Affairs (IEA), for characterizing the GH¢60.81 billion in losses that the Bank of Ghana reported for 2022 as merely technical losses.
According to the economic researcher, to reduce expenses, the Bank will have to slash certain significant operations.
In an essay titled “Dr. Bawumia’s Speech: Making the Impossible Possible?” According to Dr. Kwakye, the nation’s shifting inflation rates are among the direct impacts of the loss.
“Dr. Bawumia stated that the Bank of Ghana had only advanced funds to the Government twice in the previous seven years, indicating that the Bank’s action was both temporary and responsible.” It was not surprising that the Minister of Finance had previously voiced similar opinions, given that the government benefited directly from the financial support.
“Central bankers, however, are aware that the most inflationary way to fund the budget is with a strong currency that comes straight out of the bank. Since the Bank’s Act allows for loans of up to 5% of the previous year’s revenue, the fact that BoG loaned money to the government is not the problem. It’s concerning because of how much the advance of more than 50% of last year’s revenue reflects”.
“It makes sense that in November 2022, inflation reached its highest point of 54.1%, while in December 2022, depreciation reached its highest point of 54.2%, before plunging to 30.0%. In 2022, the Bank had a staggering loss of GHS 61 billion and a record negative equity of GHS 54 billion due to the discounting of the Government debt to BoG under the DDEP”.
Although the BoG and Finance Minister Ken Ofor-Atta downplayed the loss, Dr. Kwakye contended that the loss had a significant effect on the nation’s financial sheet.
“Both the Minister and the Governor seem to have played down the loss as only a technical loss. However, the fact is that the Bank’s balance sheet has been severely impacted, and this would force it to cut back on some of its important operations to save costs.”
