Discussions with the government for the recapitalisation of the Bank of Ghana (BoG) is on course, the Governor of BoG, Dr Ernest Addison, has said.
He said the agreement for the recapitalisation of the bank had already been signed and the frameworks on the exercise had been agreed upon by the BoG, International Monetary Fund (IMF) and the Ministry of Finance.
Dr Addison, who is the chairman of the Monetary Policy Committee of the BoG, disclosed this on Monday in reply to enquiry from the Ghanaian Times regarding the progress of discussions between the bank and the government.
This was after the press conference of the 118th regular meeting of the Monetary Policy Committee of the BoG.
The BoG incurred heavy impairment losses in 2022 due to the debt restructuring exercise embarked upon by the government to promote debt sustainability as part of the IMF programme.
The bank suffered a 50 per cent haircut on its non-marketable holdings of government debt instruments estimated at GH¢48.4 billion to help the government to secure the IMF programme and this has brought the bank’s net equity position to a negative value.
The net equity position is defined as the fair market value of a business’s assets minus its liabilities.
Dr Addison said the BoG, the IMF and the Ministry of Finance were currently working on the Memorandum of Understanding on the recapitalisation exercise.
Apart from the efforts by the government to recapitalise the BoG, the Governor said, “The bank itself is looking at ways of managing its course.”
Dr Addison said bringing inflation down for all central banks all over the world was a very costly process because the liquidity management operations were costly.
“Central Banks all over the world are losing money by incurring losses as they deliver on their mandate of price stability,” the Governor stated.
Dr Addison last year reportedly said that in view of the heavy losses incurred by the BoG there was the need for the government to recapitalise the Bbnk.
He said in spite of the negative equity position of the BoG, the BoG had enough capital to finance the operations of the bank.
BY KINGSLEY ASARE
