I don’t think Governor Addison should resign due to GHS60.8bn loss – Phillip Otoo

The Director of Research at the Bank of Ghana (BoG) Dr Phillip Otoo has said that he does not share in the views that the Governor of the central bank Dr Ernest Addison should resign because of the GHS60.8 billion loss.

He said that the factors that accounted for the loss were not the doing of the Governor.

Asked whether the Governor should reign while speaking on News 360on TV3 Tuesday, August 1, he said “No, I don’t think we are there yet. if you look at the reasons that are ascribed there were internal and external factors and especially the impact of the domestic debt exchange.”

Dr Ottoo assured that the Central Bank of Ghana will work to ensure financial stability in the economy despite the loss.

He said “For the direct impact, yes we have recorded a loss, but we will continue to discharge our mandate. This is not going to impair our ability to continue to fight inflation. So we will continue on the path of having stable inflation and ensuring financial stability in the economy.”

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The Bank of Ghana recorded GHS60.8billion loss in 2022.

The Bank said this is due to 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 amounting to ¢6.12 billion and the depreciation of the local currency resulting in net exchange loss of ¢5.27 billion.

The loss was occasioned by the Government of Ghana Domestic Debt Exchange Programme.

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 it recover.

These include: Retention of profits to help rebuild capital until equity firmly returns to 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”.

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Source:3news.com