Dr. Philip Abradu-Otoo, the Director of Research at the Bank of Ghana (BoG), has affirmed the government’s resolve to recapitalise the central bank.
In an interview with Bernard Avle on Citi TV’s The Point of View, Dr. Abradu-Otoo expressed confidence that the recapitalisation will significantly improve the central bank’s financial standing.
“Of course, the other issue is that the government is committed to recapitalising the central bank. So that commitment has come from the Ministry of Finance and that will really help with our numbers as we move along.”
When asked when the funds will be deposited into the BoG’s account, he responded, “Talks have begun, IMF, Bank of Ghana, Finance Ministry, I don’t know the form in which it’s going to come, is it cash? Or is it a mixture of cash and bonds? That is still being discussed, it will be this year. There will be some form of recapitalisation to help the balance sheet.”
A Memorandum of Understanding (MoU) for the early recapitalisation of the Bank of Ghana is expected to be signed by the end of the third quarter of this year following the Central Bank’s significant losses for two consecutive years.
The MoU is a strategic move to help restore the financial health of the central bank and drive its positive equity position after it posted a GHS 10.5 billion loss in 2023 due to high expenditure related to monetary interventions and a GHS 60.9 billion loss in 2022 over impairments during the domestic debt exchange programme.
The Ministry of Finance and the Bank of Ghana will sign the MoU to ensure that the Central Bank can continue with its mandate of managing monetary policy and ensuring price stability.
The recapitalisation plan will look at the capital required, the timeline for recapitalisation and more importantly, the funding sources.
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