Workers, suppliers, contractors, and other business partners of the Bank of Ghana should expect massive cost-cutting measures in the non-core business operations under the new governor.
Dr. Johnson Asiama who was sworn in on Monday, February 25, 2025, at the Presidency has signaled an ambitious plan to reverse the Central Bank’s negative equity position.
To achieve this, Dr. Asiama says he intends to implement severe austerity measures on the non-core operations to ensure financial stability, and credibility and restore public trust in the apex bank.
The Negative Equity Position – The Genesis
The negative equity position of the Bank of Ghana simply means the current liabilities of the Central Bank are greater than its assets. This resulted from a loss of GH¢ 60.8 billion the bank reported in 2022. The audited financial statement of the central bank revealed that the loss it made was greater than its total assets by GH¢ 54.42 billion.
The apex bank had invested in government instruments but due to economic challenges during the period, the government could not pay back as expected causing the bank to lose value on these investments.
The bank had also lent money to the Ghana Cocoa Board (COCOBOD) to help with cocoa farming and exports. However, COCOBOD also faced severe financial struggles and couldn’t fully honor the repayment worsening the losses.
These and other impairments resulting from the Debt Exchange Program mean the Bank couldn’t receive some monies it was expecting Hence it forced the Central Bank to write off those losses in its financial report. The huge impairment has eroded the Bank’s capital and raised concerns about its ability to execute its mandate.
The Austere Road to Recovery
Dr. Asiama who is assuming office with a six-point agenda to “reset” the Bank has in his sixth objective to undertake a thorough review of all the non-core operations of the bank. This he says is to identify areas where expenditures could be cut to make savings for the bank.
“My sixth and final priority area is the need to reverse the Bank of Ghana’s negative equity position to maintain financial stability, credibility, and public trust,” the newly sworn-in governor announced in his address.
He further revealed that: “We will seek to re-examine the Bank’s non-core operations where savings could be made. We shall adopt several austere measures to help reduce the Bank’s operational costs and achieve cost efficiency. Additionally, we will craft very clear policies to return the Bank’s negative equity to positive equity in the medium term.”
This signals that the bank under the leadership of Dr. Asiama is set to embrace leaner operations, cost-saving measures, and a refocus on the main mandate of the apex bank.
The Possible Impact
This announcement sends a strong signal that departments and activities within the bank that do not contribute directly to its core mandate as specified in the Bank of Ghana Act may be scaled down, restructured, or scrapped.
With this new direction, it is very clear that the fate of staff, departments, contractors, suppliers, and business relations that do not directly contribute to the control of inflation, currency stabilization, and oversee the regulation of the country’s financial ecosystem hangs in a balance.
This is expected to be undertaken in addition to other measures which are likely to include limiting lending to the government and other state institutions. Revenue enhancement measures and investment strategies are also expected to improve.
This new focus of the Bank of Ghana, under Dr. Asiama is expected to boost public confidence in the Central Bank while assuring international finance institutions and investors the new commitment of the apex bank to sound financial management.
However, it could be expected that the cost-cutting measures may likely face resistance.
