Bank of Ghana’s unlawful printing of $3.3 billion could potentially lead to bankruptcy – IEA Director

February 6, 2023

The Director of Research at the (IEA), Dr John Kwakye, has expressed his concerns over the 's (BoG) recent actions.

According to Dr Kwakye, it is unacceptable for the BoG to allow its balance sheet to be destroyed by Section 30 of the Bank of Ghana Act, which permits the central bank to lend to the government. The act has resulted in the BoG unlawfully printing $3.3 billion for the government, which Dr Kwakye believes will severely impair the Bank's balance sheet and potentially lead to bankruptcy.

In a tweet, Dr Kwakye, a former member of the Monetary Policy Committee of the BoG, said, “It is unacceptable for BoG to allow its balance sheet to be destroyed by this act. The Bank stands becoming potentially bankrupt.” He went on to add, “another result of financial recklessness perpetrated by BoG and MoF [].

How could BoG have lent ¢41.9 billion to the government in 2022 when its Act allowed only ¢3.5 billion (being 5% of 2021 revenue of ¢70bn)”.

According to Bloomberg, Ghana plans to convert an estimated ¢40 billion ($3.3 billion) of loans owed to its central bank into bonds, making it the single biggest holder of domestic government securities and exposing it to an ongoing debt restructuring. The bonds, issued by the , will also cover the interest owed to the Bank of Ghana and be added to the list of domestic debt under restructuring.

The new bonds would bring the central bank into Ghana's ongoing debt restructuring process, under which it is asking investors to swap out ¢137.3 billion ($11.2 billion) worth of local government securities into new notes with less attractive terms. The voluntary exchange has a February 7, 2023 deadline.

Dr Kwakye's comments highlight the potential consequences of the Bank of Ghana's actions and the need for greater accountability and responsibility in the management of the country's financial institutions.

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