Ghanaian economist Julius Gyimah has recommended the Bank of Ghana (BoG) to take steps to turn the country’s fortunes around and reduce further losses in order to avoid unfavourable economic repercussions.
He was reacting to the central bank’s loss of GH₵10.50 billion for the financial year ending in 2023.
He underscored the need for the bank to be prudent, maintain fiscal discipline, and cut down on its expenditure as part of measures to ensure it records more profit than losses for the next financial year and beyond.
The Bank of Ghana recorded a loss of GH₵10.50 billion for the financial year ending 2023.
Data released by the bank revealed that the loss was mainly due to a substantial increase in total interest expenses on open market operations by the Central Bank.
These expenses on open market operations rose by GH₵6.7 billion during the period under review.
In an interview with Rainbow Radio 87.5FM’s Frontline, the economist indicated that the losses documented may not have been deliberate.
He told Kwabena Agyapong on Rainbow Radio 87.5FM that, as part of the mandate of the bank, it takes on financial risks such as credit risk and interest rate risk, through loans to commercial banks or governments, or currency risk through the holding of foreign exchange reserves.
He said that by doing this, the BoG may record losses, which is to ensure the smooth functioning of the economy.
The financial system plays a crucial role in maintaining economic stability by stabilizing inflation and economic activity.
He noted that, compared to the previous financial year, the bank has seen a reduction from the GHC 60 billion it recorded in 2022.
He said that from the data released, we can see some gains made, but he was quick to add that the bank ought to adopt strategies that will help it reduce its losses.
Mr. Julius Gyimah warned that if these losses repeat in subsequent years, it may create serious economic issues, including higher inflation rates.
“Already, when it comes to our arrangements with the International Monetary Fund and the dollar supply, the BoG is no longer pumping dollars into the economy, unlike before. In the past, when the Fiscal Operations Department of the Ministry of Finance was unable to generate dollars in the system, it quickly wrote to the BoG to pump money into the economy.
So if the BoG is unable to turn the fortunes of this current situation around in subsequent years, it will create a serious crisis. We are yet to service our external debts, which we service in dollars. The bottom line is that if we do not help the bank make profits, they will have to depend on our reserves, which will create a dire situation.”
He advised them to show empathy towards Ghanaians, avoid increasing staff allowances and expenses, and suspend unnecessary expenditures to reflect the current economic situation.
“Despite previous gains, the cost of living and inflation will both peak. The Board of Governors should cut its expenses. This is not the time to raise their allowances and salaries. They should be more empathetic to the public. If they can halt part of their expenditures, it will be a step in the right direction and reflect present circumstances. This is not the time for extravagance. We have to continuously be disciplined, and when we do that, our situation will change.”
He urged the Ministry of Finance to also roll out policies to reduce expenditure, increase our exports, reduce imports, and protect our economy by investing more in manufacturing and production to generate the growth that we want.
By: Rainbowradioonline.com/Ghana
