Bank of Ghana Governor addresses 2023 losses and operational efforts

BoG governor

Dr. Ernest Addison, the Governor of the Bank of Ghana (BoG), has provided insights into the factors that contributed to the GH¢10.5 billion losses recorded by the central bank in 2023.

The Bank's 2023 Annual Report and Financial Statement revealed a loss of GH¢10.50 billion for the year, compared to GH¢60.86 billion in 2022. However, total operating income increased by 47.3 percent to GH¢8.80 billion in 2023, driven by interest earned on investments and regulatory fines.

In the foreword of the Bank of Ghana's 2023 Annual Report and Financial Statement, Dr. Addison highlighted the challenges faced by central banks globally in maintaining price stability, which incurred significant costs.

He explained that the high interest rates in 2023 led to increased expenses in conducting open market operations, contributing to the rise in interest expenses. Additionally, he said impairments on newly issued Government of Ghana Bonds, as per IFRS standards, further exacerbated the loss position reported for the year.

Despite the losses, Dr. Addison emphasized the effective operations of the Bank in fulfilling its mandate of reducing inflation. The significant decline in inflation from 54.1 percent in December 2022 to 23.2 percent in December 2023 attests to the Bank's policy effectiveness.

In his words, "With interest rates at high levels, the cost of conducting open market operations surged in 2023, contributing to high interest expenses."

He stated, "Impairments on newly issued Government of Ghana Bonds, per IFRS standards, added to the loss position reported in the year."

Dr. Addison reiterated the Bank's commitment to pursuing policies aimed at operational efficiency, along with initiatives to recapitalize the Bank to restore positive equity in the medium term.

According to him, "The Bank will continue to pursue policies geared towards high operational efficiency and, together with steps that have been initiated to recapitalise the Bank, the expectation is that positive equity will be restored in the medium-term."

In his assessment, Dr. Addison noted, "The combination of an increase in total income and reduction in operating expenses led to a total loss position of GH¢10.6 billion, representing an improvement when compared with the loss of GH¢60.9 billion recorded in 2022."

The increase in total interest expense incurred on Open Market Operations by GH¢6.7 billion was a significant driver of the loss position. However, the aggressive mopping up operations conducted by the Bank contributed to a substantial reduction in inflation, aligning with the overall macroeconomic adjustment program.

Overall, the Bank of Ghana remains focused on balancing operational efficiency with its monetary policy objectives, aiming to achieve long-term stability and growth for the Ghanaian economy.