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BoG Posts Two Straight Years of Losses but with a Reduction in 2023

The Central Bank has been noted for posting impressive profits until 2022 when the Government’s Domestic Debt Exchange Programme (DDEP) wiped out its profit and left it with an unprecedented loss.

The Bank of Ghana (BoG) has posted yet another loss but with a marked reduction at the end of 2023 compared to the previous year. The Bank and its subsidiaries reported a loss of GH¢10.50 billion, a significant improvement from the GH¢60.86 billion loss recorded in 2022.

The Central Bank has been noted for posting impressive profits until 2022 when the Government’s Domestic Debt Exchange Programme (DDEP) wiped out its profit and left it with an unprecedented loss.

Despite the progress made last year, the financial position of the Bank remains challenging. As of 31 December 2023, the total liabilities of the Bank and its subsidiaries exceeded their total assets by GH¢65.36 billion, an increase from the GH¢54.52 billion deficit reported at the end of 2022.

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In 2023, the total operating income of the Bank and the Group rose by 47.3%, reaching GH¢8.80 billion. This increase was primarily driven by higher interest earnings from the Bank’s investments in securities and bonds held abroad, as well as fines imposed on institutions for regulatory breaches, and various fees and charges.

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Total operating expenses for 2023 were reported at GH¢19.2 billion, a significant decline from the GH¢66.9 billion recorded in 2022. This reduction was largely due to lower impairment charges on Loans and Advances and the Bank’s holdings of Government of Ghana (GoG) securities. In 2022, these items accounted for GH¢54.5 billion in expenses, largely because of the DDEP.

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The combined effect of increased total income and reduced operating expenses resulted in a total loss of GH¢10.6 billion for 2023. Although still in deficit, this represents a notable improvement from the GH¢60.9 billion loss in 2022. The loss was primarily driven by a significant rise in total interest expenses incurred on Open Market Operations, which increased by GH¢6.7 billion from GH¢1.7 billion in 2022 to GH¢8.4 billion in 2023.

The rise in costs associated with Open Market Operations in 2023 was attributed to efforts to absorb excess liquidity in the economy and support the disinflation process as part of a broader macroeconomic adjustment program. These operations were instrumental in slowing down the inflation rate to 23.2% by the end of 2023, a considerable improvement from the 54.1% inflation rate at the end of 2022.

The BoG’s financial results highlight both the progress made and the ongoing challenges faced in stabilising the country’s economy.

The Bank has been criticized for constructing a new head office at a cost of $250 million. Although it has defended its decision indicating that the current head office is no longer fit for purpose, the posting of another loss could revive the discussion.

The reduction in losses and the significant impact on inflation demonstrate the effectiveness of the Bank’s strategies, even as it continues to navigate a complex financial landscape.

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