Bank of Ghana Vows Never To Lend Money To Government After Losing GH¢60.8Bn: "Our Hands Won't Burnt Again"
- The Bank of Ghana has announced that it will no longer lend money to the government in its bid to avoid a repeat of the loss that happened in 2022
- The central bank said the zero financing policy is also part of a grand plan to recoup some GH¢60.8 billion it lost in 2022
- Director of Research at the Bank of Ghana Dr Philip Abradu-Otoo disclosed during a TV programme that the policy would be implemented to the letter
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The Bank of Ghana has disclosed that it will no longer lend money to the government as part of a strictly zero financing policy, following huge losses in 2022.
The central bank lost GH¢60.8 billion in 2022, due to the depreciation of the cedi and impairment of the government securities holdings to the tune of GH¢48.45 billion.
According to the BoG's 2022 annual report, it lost money also because of impairment loans granted to government and financial institutions amounting to GH¢6.12 billion.
Source: Getty Images
The impairments were caused by the controversial Domestic Debt Exchange Programme (DDEP) introduced by finance minister Ken Ofori-Atta to deal with the government's indebtedness.
BoG explains why it has resolved not to lend to government again
Director of Research at the Bank of Ghana Dr Philip Abradu-Otoo told Joy News that the bitter experience last year has compelled it to take a strong position against financing government.
“W are enforcing it to the letter and that is going to continue for the next three years under the IMF programme,” he disclosed.
He said the strict zero financing policy is the bank's way of recouping the 2022 losses.
“I don’t think our hands are going to be burnt again. Those steps that are put in place will ensure that we get out of this situation quickly," he was firm.
He disclosed further since the start of 2023, the BoG has stuck to the zero financing policy and has not lent money to the government or its quasi-institutions.
Bank of Ghana accused of illegally writing off government debt
Meanwhile, YEN.com.gh has reported in a related story that the Minority in Parliament has disclosed that the central bank illegally wrote off government debt to the tune of GH¢48.4 billion.
Dr Cassiel Ato Forson, Minority Leader, told Parliament on Thursday, August 3, 2023, that MPs should have approved such a move first.
The Minority Leader made the comments when he rose to take part in debates on the 2023 mid-year budget review presented by finance minister Ken Ofori-Atta on July 31, 2023.
Akufo-Addo administration meets requirements for release of more bailout cash
In other news, the government has met all benchmarks for the release of the second tranche of the $3 billion IMF support.
Meeting these benchmarks will trigger the second tranche of another $600 million.
The second part of the IMF support is expected to hit the Bank of Ghana's accounts in November.
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Source: YEN.com.gh
