BoG's 2022 Losses Were Needed To Save Ghana's Economy - BoG Governor

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During the Governor’s Day Annual Bankers Dinner organized by the Chartered Institute of Bankers (CIB), Dr. Ernest Addison, Governor of the Bank of Ghana (BoG), emphatically highlighted the critical involvement of the Central Bank in ensuring the stabilization of the economy in the face of significant challenges in 2022. He emphasized the profound consequences that would have ensued had the BoG not intervened to support the government's expenditure, acknowledging the resultant ¢60 billion loss recorded by the Central Bank.

READ ALSO: Exporters Could Face 10-Year Imprisonment For Failing To Return Profits To Ghana - BoG

Economic Challenges and BoG's Role

Dr. Addison outlined the severe fiscal challenges precipitated by the COVID-19 pandemic and compounded by the spillovers from the Russia-Ukraine war in 2022. His remarks underscored the vital nature of the Central Bank's interventions which were imperative to prevent the dire collapse of the economy. He lamented the misinterpretation of the BoG's role, noting the severe backlash faced by the institution, including organized demonstrations and media attacks.

The gravity of the situation was palpable, as Dr. Addison elucidated the widening of sovereign spreads on Ghana bonds, further downgrading of Ghana's sovereign debt rating, and the subsequent restriction of the country's access to international capital markets. He also underscored the missed external borrowing and the substantial burden of debt service payments and energy-related obligations. The lack of access to new financing culminated in a liquidity and balance of payments crisis, projecting the depth of the challenge faced by the nation.

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BoG's Sacrifices and External Support

The Governor revealed the significant sacrifices made by the BoG, showcasing the loss of about $500 million in reserves within two months and a substantial increase in the government's overdraft facility. Notably, external financing remained elusive until July 2022 when the African Export-Import Bank (Afreximbank) intervened with a $750 million support package. The subsequent recourse to the International Monetary Fund (IMF) in July 2022 underscored the severity of the economic situation, prompting a comprehensive assessment that highlighted the precarious state of the economy.

READ ALSO: BoG To Shut Down Some Non-Bank Financial Institutions

BoG and IMF Collaboration

Dr. Addison concluded by emphasizing the collaborative endeavor between the BoG and the IMF, which ultimately underscored the Central Bank's crucial role in continuing to provide vital support to sustain the economy until comprehensive reform measures could trigger IMF financing.

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