Bank of Ghana Makes GH¢55.12bn Loss: Central Bank Posts Losses Due To 2022 Domestic Debt Exchange Programme

• The Bank of Ghana has lost GH¢55.12 billion due to haircuts that its investments suffered under the controversial Domestic Debt Exchange Programme (DDEP)
• BoG's holdings of marketable and non-marketable instruments were exchanged for lower-yielding instruments under the DDEP, the BoG said in its 2022 annual financial statement
• BoG governor Dr Ernest Addison said he was working to ensure that equity was restored to a positive path by the end of 2027

The Bank of Ghana (BoG) has disclosed that it lost GH¢55.12 billion in 2022 due to the haircuts that came with the Domestic Debt Exchange Programme (DDEP).

The DDEP replaced old high-yielding bonds with lower-yielding versions of much longer maturities.

Breaking down figures in its 2022 Annual Report and Financial Statements, the central bank governor Dr Ernest Addison explained that the BoG's non-marketable holdings of government instruments including long-term stocks, a COVID-19 Bond and overdraft suffered a 50% haircut.

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However, the BoG's holdings of marketable instruments were also exchanged under similar terms as other financial institutions under the DDEP.

This led to an impairment of GH¢48.40 billion in 2022, the statement disclosed.

“The negative equity position was not the result of sub-optimal policy decisions but emanated from the restructuring of government debt and adverse market movements,” Dr Addison said in the annual report.

BoG working to ensure to restore equity by 2027

The central bank disclosed it was working hard to implement measures, including the government’s support for recapitalisation.

The Bank is confident that this will ensure that equity was restored to a positive path by the end of 2027.

Dr Addison said that the BoG would implement a retention of profits policy to rebuild capital.

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There is also a plan to optimise the central bank's investment portfolio and operate a cost mix to bolster efficiency.

That's not all, the central bank says it would have an assessment of the potential need for recapitalisation support by the government in the medium term.

Ghanaians are asking questions about BoG's losses

Meanwhile, policy analysts and experts have been asking hard questions.

Vice president of IMANI Centre for Policy and Education Kofi Bentil said it was strange that the central bank would lose money when it does not operate like a commercial bank.

"I’m havIng a hard time understanding how you [BoG] spend over GH¢130m/$10m dollars of a poor nation’s money to service vehicles. Why? English can’t explain that!" he posted on Facebook.

He also said the BoG has been given too much room to use state funds the way it pleases.

"Whatever made it possible for BoG to do what it pleases with the money we don’t have is what is wrong with Ghana. If we don’t deal with it, we will continue to suffer! First responsibility lies with Parliament," he was blunt.

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Ghana’s top banks post heavy losses due to DDEP

Meanwhile, YEN.com.gh reported in a previous story that the government's debt restructuring drive has caused top banks in Ghana to record significant losses in 2022.

Ghanaian banks have been posting their 2022 performance and it shows top banks like Standard Chartered Bank and GCB Bank bled money.

GCB Bank's audited accounts show the bank recorded a GH¢593.4 million net loss for the year ending December 2022, a first since 1993.

Martin Kpebu rallies Ghanaians against DDEP

In an earlier story, YEN.com.gh reported that a private legal practitioner rallied support against the Domestic Debt Exchange programme.

Martin Kpebu said this was necessary because the government will soon include treasury bills under the next phase of the programme.

He thus described the programme in its current form as problematic and not in the nation’s best interest.

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Some analysts predicted that the DDEP would hit small banks harder.

Source: YEN.com.gh