Banking consultant and financial analyst, Dr. Richmond Atuahene, has reignited calls for the Bank of Ghana (BoG) to be recapitalized as a matter of urgency to avert any possible mishap.
This call from the analyst comes despite a marginal improvement in the BoG’s financial performance in 2024.
Although from a loss of GHC 60.8 billion in 2022, the situation improved to a loss of GHC 13 billion in 2023. The latest financial report of the central bank reveals that the loss further improved to GHC 9.49 billion in 2024.
Moreover, BoG’s equity position stands at negative GH¢61.32 billion from negative GH¢65.34 billion in 2023, marking marginal gains. Despite the gains, the financial analyst says BoG remains too fragile to perform its core monetary functions effectively.
In an interview with The High Street Journal, Dr. Atuahene stressed that the institution’s negative equity and weakened asset base severely limit its ability to execute crucial operations such as Open Market Operations (OMO), rediscounting, and acting as lender of last resort. All these, he says, are essential tools for managing inflation and maintaining monetary stability.
Given the eroded capital, Dr. Atuahene believes the government needs to look at means of pumping capital into the Central Bank to make it solvent. This will enable the apex bank to carry out its core mandate effectively.
“Recapitalisation is still needed at this point. It is very important. Apart from the reputational issue, which is affecting their policy issues,” he indicated.
For Dr. Atuahene, a bank that is a lender of last resort to commercial banks cannot operate with negative capital.
“They cannot function very well as a lender of last resort, let alone the OMO operations. And these are what you use in controlling inflation. Unfortunately, we don’t have the assets to do it. We need to come together and look at how best we can recapitalize the bank. It’s a matter of agency,” he indicated.
The financial position of the Bank of Ghana has come under increased scrutiny following the domestic debt exchange program, which significantly eroded the value of its bond holdings.
While the Bank has maintained that it remains policy solvent, experts like Dr. Atuahene argue that the absence of financial firepower seriously hampers its ability to deliver on its monetary policy mandate.
