GH¢60bn loss: BoG can’t be faulted for being forced into DDEP – John Kwakye

The Director of Research at the Institute of Economic Affairs (IEA), John Kwakye, says the Bank of Ghana (BoG) cannot be faulted for being forced into the government’s Domestic Debt Exchange Programme (DDEP), which resulted in the central bank’s 2022 financial loss.

He admitted that the BoG should be blamed for over-lending to the government, but insisted that the central bank cannot be faulted for taking a “haircut.”

The BoG recorded a staggering loss of GH¢60.8 billion within the 2022 fiscal year.

The Minority in Parliament has on a number of occasions called on the Governor of the Bank of Ghana, Dr Ernest Addison, and his deputies to resign for being reckless in the management of the central bank.

Speaking in an interview, the Director of Research at IEA, stated, “As central bankers, financing the government’s deficit is the most inflationary thing to do. That is why the central banks set lending limits to their governments. What has happened in our case [BoG] is that it looks like BoG went far beyond the sealing Act of last year’s revenue of 5%. We are told that they lent almost GH¢44 billion, and that is the magnitude. Once you do that, you are already getting yourself into serious trouble.”

“BoG over-lent to government and then you bring in this DDEP which qualifies us for IMF programme. And IMF compels BoG to be part of it. Out of the GH¢60.8 billion loss they have declared, GHC53.1 billion is coming direct from DDEP. So the question is will you fault them for that? We can fault them for over-lending to the government that is the problem, but why they were being forced to be part of the DDEP, is also another. That one, you can’t fault them for that”.

He further took a dig at the IMF for forcing the BoG to be part of the DDEP in order to secure the $3 billion bailout.

“I also have a problem, why did the IMF force our central bank to be part of the DDEP? Just because they wanted us to meet the requirement for the ECF”.

According to him, the government should rather be blamed for the loss incurred by the BoG for failing to cut down on its expenditure.

“The blame I think should be at all various levels, first the government by causing all these deficits which require some financing. We have been calling on the government to try to live within its means,”.