A banking consultant, Dr. Richmond Atuahene, has told Ghanaians not to be surprised if they wake up one day to find out that people’s treasury bills have been restructured as it happened with the bonds.
Dr. Atuahene says the Bank of Ghana’s (BoG) policy rate is not allowing the banks to lend due to the soft spot they have taken.
He explains despite the banks’ inability to lend with treasury bills going up, it wouldn’t be surprising that the treasury would suffer the same fate as the bonds which were restructured in the government’s Domestic Debt Exchange Programme (DDEP).
Speaking on the KeyPoints on TV3 Saturday, June 08, 2024, Dr. Atuahene stated that because the state has found appetite in borrowing in the short term to increase the debt profile, the private sector is crowded, indicating the banks appear to be existing on the whims and caprices of the government.
“Because you have pre-financed fiscal, the policy rate is now hanging at a rate of about 29.5%. No bank is prepared to go into lending. Now they have taken a soft spot. That is why Alfred said the lending is going down but the treasury bill is going up. This is the same model that was used in the bonds.
“I won’t be surprised [that] one day we get up and people’s treasury bills would have been restructured because if you look at the debt profile, the debt has hit over 700 billion even apart from the debt restructuring because we have found the appetite to borrow on the short term in the market and if you do that, you’re also crowding up the private sector. One way, you have high nonperforming created by the government, and then in one way, you are also borrowing at the other side so basically the banks are almost there to exist on your own whims and caprices,” he stated.
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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