NDC hints introduction of BoG recapitalization levy

The Minority in parliament has hinted at the introduction of a new levy called the Bank of Ghana recapitalization levy.

According to the Minority leader, Dr Cassiel Ato Forson, Ghanaians must brace themselves to pay for the losses incurred by the Bank of Ghana.

Speaking at a press briefing on August 8, 2023, he noted that the Central Bank has collapsed after recording losses worth GH¢60 billion in 2022.

“The IMF has made offers to assist the Government to develop a plan for the recapitalization of the Central Bank. That is why paragraph 18 of Ghana’s Memorandum of Economic and Financial Policy (MEFP) sent to the IMF stated this fact. Let me assure you that very soon, Ghanaians will be made to pay for the Bank of Ghana recapitalization levy, a tax to recapitalize the Bank of Ghana because the central bank has collapsed virtually,” Dr Ato Forson stated.

Dr Ato Forson, along with other NDC members has called for the resignation of the governor of the Bank of Ghana and his deputies.

He said: “Perhaps the more troubling fact is that having brought the Bank of Ghana to this terrible financial state, the Governor and his deputies have found it prudent and expedient to invest $250 million (GHC2.8 billion) on another Head Office building somewhere at Ridge. In our circumstances, this is the height of insensitivity in the management of the finances of a troubled country.”

Meanwhile, the government has refuted the claims.

Below is a statement from the Deputy Minister of Finance, John Kumah

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 and charges 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.

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.

It is important to further highlight that a negative balance sheet by a Central Bank is not unusual, in fact most Central Banks around the world run negative balances to achieve the overall economic anchor objectives of a Central Bank.

“History clearly illustrates this. Several central banks had negative equity yet fully met their objectives – for example, the central banks of Chile, Czechia, Israel and Mexico experienced years of negative capital. But throughout, financial and price stability were maintained.” – Bank For International Settlements Bulletin No.68.

According to Nordstrom and Vredin (2022), a central bank’s credibility depends on its ability to achieve its mandates. Losses do not jeopardise that ability and are sometimes the price to pay for achieving its aims.

Such propaganda and unnecessary attacks at the central bank only results in increased market volatility, panic selling of assets, and can trigger chain of events that can affect our overall economic stability.

SSD/DA

Watch the latest edition of BizTech and Biz Headlines below: