Ghana’s central bank has said it is expecting a financial injection from the government to strengthen its capital base after the domestic debt exchange program (DDEP) impacted its balance sheet significantly in 2023.
Bank of Ghana Governor Johnson Asiama disclosed during the regular Monetary Policy Committee press briefing on Wednesday that discussions so far show the government is willing to recapitalize the Bank of Ghana, adding that even though the central bank is not a profit-making institution, recapitalization is crucial to safeguard its policy credibility and operational efficiency.
The governor attributed the weak capital base of the bank to the DDEP implemented by the government in 2022, which compelled the Bank of Ghana to absorb a substantial portion of the cost of adjustment to stabilize the economy.
“It is only fair that the wounds suffered as a result of the DDEP are addressed. We can assure you that the Central Bank will be recapitalized to remain policy solvent to carry out our operations in line with our mandate,” the governor assured.
In 2023, the Bank of Ghana reported that its capital base had been impacted by the government’s DDEP, implemented as part of the conditions to secure the support of the International Monetary Fund (IMF) for Ghana’s economic reforms.
This resulted in the central bank reporting a 10.5 billion Ghana-cedi loss in the 2023 financial year, after a larger loss of 60.8 billion cedis in 2022, leading to the bank’s total liabilities exceeding its total assets by 65.36 billion as of December 31, 2023.
Gradually, however, the central bank has been stabilizing the situation with significant reductions in the losses since 2024 as the economy started responding to the IMF-backed reform.