Bank of Ghana records GH₵10.5bn loss in 2023

The Bank of Ghana recorded a loss of GH₵10.50 billion for the financial year ending 2023.

This loss was mainly due to a substantial increase in total interest expenses on open market operations by the Central Bank.

These expenses on open market operations rose by GH₵6.7 billion during the period under review.

The increase in the expenses the bank says was incurred due to the need to manage excess liquidity in the economy and support the disinflation process as part of the broader macroeconomic adjustment programme.

As of December 31, 2023, the Bank of Ghana and its subsidiaries had total liabilities exceeding total assets by GH₵65.36 billion.

The total operating expenses for 2023 were GH₵19.2 billion, a notable decline from the GH₵ 66.9 billion recorded in 2022 – attributed to lower impairment charges on loans and advances and the Bank’s holdings of Government of Ghana securities

This GH₵10.50billion loss is however a significant improvement compared to the GHS 60.9 billion loss the Central Bank posted in 2022 following the impairment of its holdings of marketable government stocks and non-marketable instruments during the domestic debt exchange programme.

The Bank of Ghana further explains that “this Open Market Operations activity, which accounted for a significant portion of the loss incurred yielded positive results”

“The aggressive mopping up operations, contributed to slowing down inflation to 23.2 per cent by the end of 2023, significantly down from the rate of 54.1 per cent at the end of 2022”, the Bank of Ghana’s 2023 Annual Report and Financial Statement disclosed.

Per the report, no amount was set aside for reserve appropriation as the reserve amount was in deficit as at 31 December 2023.

The Central Bank was quick to add that a note of policy solvency highlighting its ability to generate enough realised income to cover costs associated with the conduct of monetary policy operations.

In the view of the Board of Directors and Management, the policy solvency outcome for 2023 is consistent with the view held in 2022.

The report said, the Bank will continue to operate efficiently and effectively on a going concern basis and achieve its policy mandates, despite the significant loss recorded at the time.

The Bank’s directors did not recommend the payment of dividends for the period.

Proposals to return to positive equity

To ensure a recovery and build-back of a positive equity position within the medium to long term, the Board of Directors have resolved to take the following actionable steps:

1. Refraining from monetary financing of the Government of Ghana’s budget. In this regard, the Bank will continue to adhere to the terms of the Memorandum of Understanding on zero financing of the budget signed between the Bank of Ghana and the Ministry of Finance on 26 April 2023.

2. Continuing with policy measures aimed at optimising Bank of Ghana’s investment portfolio and operating cost mix to bolster efficiency and profitability; and

3. Signing a Memorandum of Understanding to secure early recapitalisation of the Bank of Ghana in the medium-to- long term. Within the context of the second review of the ongoing IMF programme which concluded on April 12 2024, the impact of the Domestic Debt Exchange Program on the balance sheet of the Bank of Ghana was discussed extensively and broad consensus was reached amongst the Ministry of Finance, the Bank of Ghana and the IMF on early recapitalisation of the Bank of Ghana. A Memorandum of Understanding between the Bank of Ghana and the Ministry of Finance on how the recapitalisation is to be executed is expected to be signed by the end of the third quarter.