Friday, 19 July

Bank of Ghana not bankrupt – Otabil

The Director of Communications of the Bank of Ghana, Mr. Bernard Otabil

Mr. Mahama Ayariga, the Member of Parliament (MP) for Bawku Central, on authority of Dr. Cassiel Ato Forson, the Minority Leader in Parliament, has written to the Greater Accra Regional Commander of the Ghana Police Service notifying the police command about a planned public protest against the Governors and Board of the Bank of Ghana on July 30, 2024.

Offering reasons behind the protest, the MP stressed, among others, that “the Governor has embarked on the construction of a new house for the Governor himself at a speculated cost of Forty Million United States Dollars (USD$40 million) and has refused to disclose to us the actual cost when the Minority wrote to him requesting the information on the cost of the Governor’s house under construction”.

However, it may be recalled that in a letter to the MP by the Bank of Ghana (based on a request for information made to the Bank by the MP) dated June 18, 2024, the Bank explained to the MP that “with the approval of the Public Procurement Authority (PPA), the BoG awarded a contract for the construction of a bank duty post at the premises of the old clinic. The BoG went through the necessary procurement processes in accordance with the Public Procurement Act, 2003 (Act 663) as amended by the Public Procurement Act, 2016 (Act 914) in 2022. The cost and details of the construction may be obtained from the PPA”.

Meanwhile, further checks have revealed that the Governor of the Bank is already in his second term of office and there is no way that the Bank would be constructing a house “for the Governor himself”.

Asked whether the Bank was aware of the planned protests and the letter to the Greater Accra Regional Police Commander, the Director of Communications of the Bank of Ghana, Mr Bernard Otabil, stressed that he has seen a copy of a letter circulating on social media purported to be a notice of protest but cannot speak to it because he has not seen an original copy of the document.

Pressed on some of the allegations made in the letter, Mr. Otabil stressed that as a matter of public interest,  central banks all over the world have registered losses in their quest to achieve their price stability mandate: “Central banks all over the world are registering negative equity and this does not mean they fold up and cease operations. Ours is the provision of public good. Therefore, we place purpose over profit. This is the story of central banking.”

“As I have explained in previous discussions, the Bank of Ghana is policy solvent and not bankrupt as it has been touted. In fact, the Annual Report and Financial Statements (2023) released some few months ago provide elaborate explanation on the Bank’s policy solvency. In 2023, fighting inflation, that is reducing inflation from 54.1 per cent at end December 2022 to 23.2 per cent at end December 2023 came with a cost of more than GHS8 billion, contributing to the loss in that year. In 2022, the Domestic Debt Exchange Programme was the bane of the financial position,” Mr Otabil added.

“If BoG had not suffered the hit all the pensions funds in the country would have been wiped out. BoG is the only institution that can absorb those losses and correct it over time,” he explained.

On the issue of wanton cost incurred by the Bank, Mr Otabil said: “In BoG, we engage in strategic planning spanning a numbrer of years. Every year, Departments draw up their activities for the following year and it is costed, and captured in the budget, which becomes the operational blueprint. There are budgetary hearing processes, and the Board sub-committee reviews them and final budget is presented for Board approval. All activities undertaken are budgeted. And in the area of procurement, all the PPA processes are followed.”

Commenting on the Bank’s defict, Mr Otabil explained: “The IMF and all international bodies know we will ran a deficit for a few years before the situation is corrected. The proposed government recapitalisation only has to do with the direct impact of the DDEP, which was necessary to access the IMF programme. Government recapitalisation will not be done in a single year. It will be done over a period of time in order not to negatively impact the fiscal space created. These are technical matters and the Bank is ready to provide further education on it,  even through a workshop. There are no hearsays here but issues of fact. The Bank is committed to maintaining stability in the general level of prices to improve the living standard of all Ghanaians.”