BoG Explains Why It Lost GHC 60.8 billion In 2022
The Central Bank of Ghana has justified the reason for the huge financial loss it recorded in 2022 following public outrage at the development.
In its Annual Report and Financial Statements released over the weekend, the BoG said it lost GHC 60.8 billion.
Out of the total amount, the Bank said GHC53.1 billion resulted from Domestic Debt Exchange Programme (DDEP) whereas price and exchange rate valuation effects resulted in GHC 5.2 billion of the total loss, and GH3.3 billion from interest expense on the cost of monetary policy operation accounted.
Justifying the whooping GHC53.1 billion loss, it explained, “In addition, the Bank of Ghana’s (BoG’s) exposure to COCOBOD, which has been built over the years, was also impaired. As we all know, the Government of Ghana embarked on both domestic and external debt restructuring. The holdings of Government instruments and COCOBOD exposures were all part of the perimeter of the debt exchange.
“Whereas all other stakeholders that participated in the Domestic Debt Exchange (DDEP) did not have principal haircuts, but rather had new instruments with new tenors and coupon structure, the BoG, served as the loss absorber to the entire debt exchange program, a key requirement that allowed the Government of Ghana to meet the threshold for the approval of the IMF program.”
As a result, it said the Bank had to take on a 50 per cent principal haircut on the total principal (which stood at GHC 64.5 billion at the time of the exchange).
It continued, “Consequently, BoG had new instruments with extended tenor and significantly reduced coupon. By applying the full requirements of IFRS 9, this means that from the principal alone, a 50 per cent haircut on the non-marketable amounted to a loss of GHC32.3 billion. Restructuring of marketable instruments amounted to a loss of GHC16.1 billion. The impairment from exposure to COCOBOD also amounted to GHC 4.7 billion.
Read The BoG’s Response To Frequently Asked Questions About The Report Here: FAQs-on-BOGs-2022-Annual-Report-01-08-2023-1
