The Governor of the Bank of Ghana, Dr. Ernest Addison, has defended the management record of the central bank, following the loss of GH¢60 billion in 2022.
Addressing a press conference on Monday [Aug 21] to explain the circumstances leading to the unusual loss, Dr. Addison explained how the central bank, prior to 2022, had been registering profits, and how that positive streak was affected by global economic factors, which hit Ghana and several economies around the world.
“At the end of 2019, through prudent economic management, macroeconomic fundamentals had been well anchored. The Bank of Ghana reported profits of GH¢1.6 billion in 2019, GH¢1.5 billion in 2020 and GH¢1.4 billion in 2021,” Dr. Addison said.
“The policy objective then, was to consolidate the gains made between 2017-2019 and steer the economy towards achieving broad-based inclusive growth and establishing all the needed structures for transitioning from a Frontier Economy to a Full-Fledged Emerging Market economy. Then came the Covid-19 pandemic at the turn of 2020. We all witnessed the devastating effects of the pandemic and the uncertainty this disequilibrium created globally. Ghana was not spared the effects of the pandemic.”
The central bank Governor added that the precarious situation, required clear public policy initiatives by the government to protect lives and livelihood “at all costs”, and “protecting lives and livelihood at all costs required exceptional financing’.
He added that fortunately for Ghana, the intervention of global financial institutions, through the IMF’s Rapid Credit Facility and the World Bank, ensured that a portion of this financing was met.
He further explained that with limited external funding available to the government, the Central Bank had to intervene in the emergency situation.
“The Bank of Ghana, following prudent management, had built enough buffers and policy space, which enabled it to trigger the emergency financing exception under Section 30(6)) of the Bank of Ghana Act, Act 612 as amended, to provide the needed additional financing support through the purchase of GHC10 billion of the Government’s Covid-19 bonds, which helped to close the exceptional financing gap.”
“These interventions from the Bank of Ghana, the IMF, and the World Bank, helped the government to navigate and effectively contain the devastating effects of the pandemic.”
“The Bank of Ghana was able to step in with the support to the economy until the IMF programme was concluded, because of the policy buffers built, following years of prudent management.
“This is a reflection of the resilience of the Bank of Ghana for being able to rise up to the occasion to play its statutory role as the lender of last resort to support the economy during the crisis.”
“Economic history also teaches us that crises are a part of the business cycle, and the accumulation of policy buffers is the only way to guarantee space to deal with such crises, and this is clearly the role the Bank of Ghana played with distinction.”