BoG Governor Justifies Central Bank RecapitalizationBoG Governor Justifies Central Bank Recapitalization The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, has asserted the importance of recapitalizing the central bank. He argued that this measure will bolster the BoG’s credibility in implementing reforms outlined in a memorandum of understanding (MoU) to be signed with the Ministry of Finance. According to Dr. Addison, the stability and unwavering commitment are crucial in carrying out the structural reforms envisioned in the program, including the signing of the MoU on the central bank’s recapitalization. This move, he emphasized, will enhance the BoG’s authority to effectively implement its改革. The BoG announced its intention to sign the MoU in June 2024, following substantial losses over two consecutive years. The MoU serves as a strategic initiative to restore the central bank’s financial stability and strengthen its equity position after incurring losses of GHS10.5 billion in 2023 and GHS60.9 billion in 2022. The signing of the MoU between the Ministry of Finance and the BoG aims to ensure the central bank’s continued ability to manage monetary policy and maintain price stability. The recapitalization plan will address capital requirements, timelines, and financing sources.
Dr. Ernest Addison
The Governor of the Bank of Ghana, Dr. Ernest Addison, has justified the drive to recapitalise the central bank.
He said this will strengthen their credibility in implementing reforms planned under a memorandum of understanding his organization will sign with the Ministry of Finance.
Dr. Addison said this during a joint press conference of the Ministry of Finance, the International Monetary Fund and the Bank of Ghana in Accra on July 1, 2024.
“Stability and commitment are needed from now until the end of the year to implement all the structural reforms envisaged in the programme, including the signing of the Memorandum of Understanding (MoU) between the Ministry of Finance and the Bank of Ghana on the recapitalisation of the central bank. This will strengthen the credibility of the central bank to effectively implement its reforms,” he explained.
In June 2024, the central bank announced its intention to sign the MoU after posting significant losses for two years in a row.
The MoU is a strategic move to restore the central bank’s financial health and increase its positive equity position after the bank incurred a GHS10.5 billion loss in 2023 due to high expenditures related to monetary interventions and a GHS60.9 billion loss in 2022 due to write-offs during the domestic debt swap programme.
The Ministry of Finance and the Bank of Ghana sign the MoU to ensure that the Central Bank can continue with its mandate to manage monetary policy and ensure price stability.
The recapitalization plan looks at the capital required, the timeline for the recapitalization and, more importantly, the sources of financing.
