Bank of Ghana is not Bankrupt – Otabil

The Bank of Ghana’s Director of Communications, Mr. Bernard Otabil, emphasized that central banks globally have faced losses in their efforts to maintain price stability, Bank of Ghana is not bankrupt citing it as a matter of public interest.

His statement was made in response to the announcement by Mr. Mahama Ayariga, the Member of Parliament for Bawku Central, who, acting on behalf of Dr. Cassiel Ato Forson, the Minority Leader in Parliament, informed the Greater Accra Regional Commander of the Ghana Police Service about a planned demonstration against the Governors and Board of the Bank of Ghana on July 30, 2024.

The MP highlighted various reasons for the protest, one of which was the construction of a new house for the Governor at an estimated cost of Forty Million United States Dollars (USD 40 million). The Governor’s refusal to disclose the actual cost despite a request from the Minority further fueled the protest. However, a letter from the Bank of Ghana to the MP, dated June 18, 2024, clarified that the construction was actually for a bank duty post at the old clinic premises. The Bank had followed all necessary procurement processes as per the Public Procurement Act, 2003 (Act 663) and its amendments. It was also mentioned that the Governor is already in his second term, making it unlikely that the Bank would be constructing a house for him.

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The Bank of Ghana’s Director of Communications, Mr. Bernard Otabil, acknowledged being aware of a letter circulating on social media regarding planned protests but emphasized that he has not seen an original copy of the document. When questioned about the allegations in the letter, Mr. Otabil highlighted that central banks worldwide often incur losses in their pursuit of price stability, Bank of Ghana is not Bankrupt.

He emphasized that despite facing negative equity, central banks continue to operate in the interest of the public good, prioritizing purpose over profit. Mr. Otabil further clarified that the Bank of Ghana remains policy solvent, as detailed in the Annual Report and Financial Statements (2023). The Bank’s efforts to combat inflation in 2023 resulted in a significant cost of over GHS8 billion, contributing to the reported loss. The previous year, the Domestic Debt Exchange Programme had a detrimental impact on the Bank’s financial position.

The pension funds in the country would have been completely wiped out if BoG had not suffered the hit. BoG is the only institution capable of absorbing those losses and correcting them over time.

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Mr. Otabil addressed the issue of excessive costs incurred by the Bank by explaining the strategic planning process that spans multiple years. Each year, departments outline their activities for the following year, which are then costed and included in the budget. This budget serves as the operational blueprint and goes through budgetary hearing processes before being reviewed by the Board sub-committee and presented for Board approval. All activities are budgeted for, including procurement which follows all PPA processes.

In regards to the Bank’s deficit, Mr. Otabil clarified that the IMF and other international bodies are aware that a deficit will be run for a few years before the situation is rectified. The proposed government recapitalization is directly related to the impact of the DDEP, necessary for accessing the IMF program.

This recapitalization will not occur in a single year but will be spread out over time to avoid negatively impacting the fiscal space. These are technical matters and the Bank is prepared to offer further education, possibly through a workshop. There are no rumors, only facts. The Bank is dedicated to maintaining price stability to enhance the living standards of all Ghanaians.