A Banking Consultant, Dr. Richmond Atuahene, has asked for the suspension of the Fiscal Responsibility Act which requires that the government does not spend more than 5% of its Gross Domestic Product (GDP) for the previous year.
According to the consultant, if the government had acted according to the fiscal responsibility, the Bank of Ghana wouldn’t be incurring the losses it made in 2022 and 2023.
Dr. Atuahene has blamed the BoG for causing the losses and acting like making an attempt to solve the problems it has created.
His comments come on the back of GHC10billion loss the central bank made per its 2023 Annual report.
Speaking on the KeyPoints on TV3 Saturday, June 08, 2024, the banking consultant said “the law, the fiscal responsibility, I wish was suspended. If we had played the game according to the fiscal responsibility 5%, I don’t think we would find ourselves where we are, thinking that somebody is trying to solve a problem. You don’t create a problem and wanting to solve the problem because you created it. I challenge whoever will come with data, it is the central bank who has caused the problem.”
The Bank of Ghana (BoG) announced a GH₵10.50 billion loss for the financial year ending 2023, attributing it to an increase in total interest expenses on its open market operations.
During the period under review, these expenses surged by GH₵6.7 billion.
The BoG, had, in the previous year, 2022, incurred a whooping GH₵60.9 loss due to the impairment of its holdings of government stocks and non-marketable instruments during the domestic debt exchange program.
Aside from supporting the disinflation process as part of the broader macroeconomic adjustment programme, the BoG says the rise in expenses was necessary to manage the economy’s excess liquidity.
As of December 31, 2023, the central bank and its subsidiaries had total liabilities surpassing total assets by GH₵65.36 billion.
The total operating expenses for 2023 were GH₵19.2 billion, a significant decrease from the GH₵66.9 billion recorded in 2022.
This reduction is attributed to lower impairment charges on loans and advances and the Bank’s holdings of Government of Ghana securities.
“This Open Market Operations activity, which accounted for a major portion of the loss incurred, yielded positive results,” the Bank of Ghana further explained.
The Bank of Ghana’s 2023 Annual Report and Financial Statement revealed that “the aggressive mopping up operations, contributed to slowing down inflation to 23.2 per cent by the end of 2023, significantly down from the rate of 54.1 per cent at the end of 2022.”
The BoG also says in its report that no funds were allocated for reserve appropriation, as the reserve amount was in deficit as of December 31, 2023.
The Central Bank promptly added a note on policy solvency, emphasizing its ability to generate sufficient realized income to cover the costs associated with conducting monetary policy operations.
In the opinion of the Board of Directors and Management, the policy solvency outcome for 2023 is consistent with the perspective held in 2022.
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