The Bank of Ghana (BoG) released their 2023 Annual Report and Financial Statements revealing a GH¢10.4 billion loss. The loss dashes hopes of a recovery in the balance sheet of the central bank after a record GH¢60.8 billion loss in 2022 resulting from an impairment of GH¢48.4 billion on government securities held by the bank.
Operating income increased to GH¢8.8 billion from 2022’s GH¢5.97 billion primarily from interest on the securities held by the bank. Total operating expenses were GH¢19.2 billion. The major operating expense was the cost of open market operations which is up almost five-fold to GH¢8.37 billion compared to 2022. The cost of open market operations (OMO) refers to the interest the BoG pays on BoG bills issued to commercial banks. Also prominent was a GH¢4.3 bilion net exchange loss in foreign securities held by the bank. Impairment losses on securities held was only GH¢595 million compared to the significant impairment charge in 2022.
The bank’s negative equity, which is a measure of how much liabilities the bank has over the assets it holds, increased to GH¢66.4 billion from the GH¢55 billion recorded in 2022. Technically, a situation in which an entity’s liabilities exceeds its assets is known as insolvency. The BoG however stresses that it has policy solvency because its total income generated of GH¢8.8 billion is adequate to cover open market operations cost of GH¢8.37 billion.
The bank also announced a significant increase in gold holdings from GH¢2.6 billion in 2022 to GH¢14 billion in 2023 thanks in part to their Domestic Gold Purchase Programme (DGPP) which was launched in June 2021. The policy involes the purchase of refined gold from mining firms and unrefined gold from local gold aggregators for onward refining. The gold reserves stood at 571,339.46 ounces as at the end of 2023.
Analysts have been concerned about the negative equity position of Ghana’s central bank following government’s Domestic Debt Exchange Programme (DDEP). The latest results will do little to reassure them that the central bank is well-placed to play its role as the lender of last resort.