BoG GH¢60 billion loss is 'untenable', this is 'reckless spending' - Atik Mohammed

Former Acting PNC General Secretary, Atik Mohammed has expressed concerns over the alleged financial malfeasance against the Bank of Ghana under the leadership of Dr. Ernest Addison, Governor of the bank.

The bank is said to have incurred a loss of GHC 60.8 billion last year due to mismanagement.

"This is twice the amount we are to receive from our recent IMF bailout,” Minority Leader, Ato Forson told Journalists during a "Moment of Truth" event organized by the opposition National Democratic Congress on Tuesday, August 8.

He further stated, “the bank has also recorded a negative equity of over GHS55.1 billion. What this simply means is that the Bank of Ghana is insolvent" and blamed the Akufo-Addo government saying "the once prestigious Bank of Ghana, the mother of all banks in Ghana, has been bankrupted and collapsed by this NPP economic management team led by Dr Mahamudu Bawumia with the complicity of the Governor of the Central Bank”.

But the authorities of the Bank of Ghana have refuted the financial mismanagement claims.

BoG Response

"Bank of Ghana released its full-year 2022 audited financial statements on 28th July 2023. The
financial statements reported a total loss of GHS60 billion, which has since become a matter of
unfortunate politicisation. It is noteworthy that GHS53.1 billion of those losses were a direct result
of the Government’s domestic debt restructuring exercise.

"It is important to put the Bank of Ghana’s 2022 financial results in proper context with a clear statement of the problem that Ghana faced and the chronology of events in Ghana since 2019. There was a clear mismatch between revenue inflows and expenditure financed in 2020 by exceptional support from the IMF and World Bank resources, and in addition to financing from the Bank of Ghana through the issuance of the GHS10 billion Covid-19 bond", the bank's website disclosed.

The bank report also said; "This triggered a liquidity crisis, spilling over into a balance of payments crisis. External and domestic payments needed to be made, the domestic auction was failing, and the Bank of Ghana had to step in to arrest a major economic and social crisis.

"A major plank of the corrective action required for the IMF programme was the Domestic Debt Exchange, where the stock of Government of Ghana debt was to be halved from 105% of GDP to
55% of GDP by 2028. The holders of Government debt had their debt instruments exchanged for new ones with lower interest payments and longer terms.

"Despite the losses inflicted on households and banks, the threshold of 55% of GDP was not met. The Bank of Ghana was used to close the gap to enable Ghana meet the debt threshold that qualified Ghana for the IMF programme (Bank of Ghana therefore, acted as a loss absorber)."

It further established that "the Bank of Ghana had to absor a 50% haircut on its non- marketable holdings of Government debt instruments. This singular act led to significant impairment losses of GHS 32.3 billion to the Bank’s accounts. Impairments of marketable instruments also accounted for another GHS16.1 billion, bringing the total impairments of Government holdings to GHS48.4 billion" and continued that "as experienced by central banks globally, price and exchange rate movements led to a loss of GHS5.2 billion whiles impairments of Cocobod loans amounted to GHS4.7 billion. This is the reason the Bank of Ghana reported a loss of GHS60 billion in 2022".

BoG revealed that the money covered their vehicle maintenance expenses stating "fuel cost for all BoG operations, insurance of all BoG fleet of vehicles, car parts replacements, and other maintenance cost. Historically, fuel cost has accounted for about 90 percent of this vehicle maintenance expenses expenditure line. For 2022, the fuel cost increased by 123.3 percent compared to 28.9 percent in 2021".

Atik Questions BoG

But Atik Mohammed has taken the Bank of Ghana's statements with a pinch of salt.

Speaking on Peace FM's "Kokrokoo" morning show, he found the bank's explanations and expenses untenable.

“The question to ask is what is number of the Central Bank’s fleet of cars? How many cars do they have moving currency all over the country? The second question is on average, how many times do these vehicles carry or move currency from the Central Bank to these commercial banks and all other financial institutions? In a week, on average, how many times do they move?”, he asked for further clarifications.

“These are very critical questions that require answers because those answers will weather the expenditures they incurred are justifiable or not. But on the face of it and given the explanation they’ve given us, they are not tenable,” he told host Nana Yaw Kesseh.

Atik called for investigations into the BoG issue stressing “it greatly saddens me that a major player in Ghana’s economic policy could be this reckless as far as spending is concerned”.