An economist and Banking Consultant Dr Kojo Aboagye-Debrah has suggested that the Bank of Ghana (BoG) undertake capital restoration which should be supervised by Parliament.

He said the supervision by the Legislature will ensure the Central Bank’s sanity, stability, and confidence and also avert losses it incurred.

His comment comes after the Bank of Ghana reported that it has recorded GHS60.6 billion loss in 2022.

The losses occurred as a result of the impairment of the Government of Ghana’s securities holdings of ¢48.45 billion, the impairment of loans and advances granted to quasi-government and financial institutions which also amounted to ¢6.12 billion and the depreciation of the local currency.

Reacting to the disturbing development on TV3, Dr Aboagye-Debrah urged Parliament to step in and supervise the restoration of capital for the Central Bank.

“Bank of Ghana is operating our treasury functions and policy functions. I think with time we need to look at some of these. For now, we need a transition in terms of a supervisory role for the restoration of capital because the Bank of Ghana mandates now, given the opinion of the auditors, I think it will be appropriate in their own sense to ask a third party to step in transitional, that does not mean we are taking their independence away. ” he said.

According to the BoG, its Board of Directors and Management assessed the policy solvency implications arising out of the negative net worth position and the group’s ability to continue to generate enough income to cover its monetary policy operations and other operational costs.

In the view of the directors, the Central Bank will continue to operate on a going-concern basis due to a variety of factors underpinned by expectations of an improved macroeconomic situation and policy actions specifically targeted at improving its balance sheet.

In its Annual Report, the Central Bank outlined these measures which it believed would help its recovery.

These include the retention of profits to help rebuild capital until equity firmly returns to a positive region.

Refraining from monetary financing of the Government of Ghana’s budget. In this respect, action has already been taken with a Memorandum of Understanding on zero financing of the budget signed between the Bank of Ghana and the Ministry of Finance on 26 April, 2023;

Taking immediate steps to optimise the Bank of Ghana’s investment portfolio and operating cost mix to bolster efficiency and profits; and

Assessing the potential need for recapitalisation support by the government in the medium-to-long term

It furthered that the Board of Directors and Management are of the view that “continued efforts at restoring macroeconomic stability and debt sustainability in addition to long-term efforts at building reserves, provide enough basis for continued operational policy efficiency existence for the foreseeable future”.