BoG Governor Says DDEP Was A Matter Of Life And Death, Denies Bank's Autonomy Was Undermined

• The Bank of Ghana Governor has denied that the Domestic Debt Exchange undermined the bank's independence
• He said the DDEP was a national response to a crisis that threatened to upend the country's economic infrastructure
• He noted that the central bank worked within the recommendations delivered by the IMF and retained its autonomy

The Governor of the Bank of Ghana (BoG), Dr Ernest Addison, has rejected claims that the Domestic Debt Exchange Programme (DDEP) had undermined the central bank’s independence.

He said the domestic debt exchange was a direct reaction to a significant national crisis which, if left unaddressed, could have led to an implosion of the nation’s economic infrastructure.

In an interview with JoyNews, he was adamant that the programme had not affected the central bank's autonomy.

He stressed that the DDEP was a matter of life and death for all Ghanaians and, if left unattended, could have caused national instability.

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“There was going to be chaos because nobody was getting their investment returns,” he said.

Dr Addison further clarified that the Bank of Ghana’s participation in the debt exchange was a strategic response to the crisis.

He said the International Monetary Fund’s approach was to declare a debt standstill while the central bank financed the government to maintain stability.

The debt exchange programme eventually succeeded the debt standstill.

Dr Addison rehashed that the Central Bank maintained its independence throughout the trying period while doing everything within its power to ensure the country did not devolve into chaos.

BoG Governor justifies banking sector cleanup

In the same interview, the BoG Governor justified the controversial 2017 banking sector crisis and the central bank's actions to reshape the country’s fiscal space.

In an interview with JoyNews, Dr Addison stated that revoking banking licenses had been critical to restoring stability and confidence in the sector.

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He said he had inherited a banking sector that functioned like a Ponzi scheme, contributing to low confidence in financial institutions.

He said the phenomenon could not have been corrected without the revocation of banking licenses.

Dr Addison gave a grim glimpse of the situation that had led to the banking sector crisis.

He noted that some bank shareholders used depositors’ money to run their personal businesses.

Some funds were also put into brick-and-mortar investments, which weren’t liquid enough to meet withdrawal demands.

He described the malpractices as a total disregard for banking rules and hence the need for the cleanup.

BoG Governer explains banking sector cleanup

YEN.com.gh also previously reported that the banking sector cleanup was triggered by the collapse of UT Bank and Capital Bank in August 2017.

The BoG had revoked the licenses of poorly managed banking institutions, such as GN Bank, paving the way for stronger and better-governed banks.

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Dr Addison further stated that despite all the controversies arising from the cleanup, he was proud the BoG had achieved such an admirable feat.

Proofread by Bruce Douglas, senior copy editor at YEN.com.gh

Source: YEN.com.gh