The Bank of Ghana (BoG) has moved to debunk the allegations that it printed huge chunk of money to finance government’s expenditure, stressing that nothing like that happened under its able watch.

According to the Central Bank, the bank possesses sufficient resources, including reserves offshore, correspondent bank holdings, investments in US Treasury, and trading in gold and currencies, to support its operations and government expenditure without resorting to printing money.

Dr. Philip Abradu-Otoo, Director of Research at the Bank of Ghana, who was reacting to the allegations, unequivocally stated that it did not engage in the printing of “fresh cash” in 2021 and 2022 to fund government expenses.

Dr. Abradu-Otoo explained that financing of government expenditure was facilitated from existing resources rather than through the creation of new currency.

The denial comes amid recent allegations suggesting that the central bank printed GH¢77.6 billion for the government, which was later written off and replaced with a 15-year bond.

Bank of Ghana’s Financial Performance and Loss Recovery

Regarding the bank’s financial performance, the Bank of Ghana recorded a loss of GH¢60.85 billion at the end of 2022, in stark contrast to a profit of GH¢1.2 billion in the previous year. Speculation had arisen that the loss was a result of fresh government expenditure in 2022. Dr. Abradu-Otoo dispelled this notion, attributing the loss to the impact of the Domestic Debt Exchange Programme, specifically affecting “Legacy Government Papers and Transactions” dating back to 1992.

Despite the loss, Dr. Abradu-Otoo assured that the Bank of Ghana has identified structures and actions to return the bank to positive equity. He expressed confidence that the bank will continue to maintain policy solvency and effectively discharge its mandate even during this period.

Responding to concerns about the bank’s mandate of ensuring financial stability amidst the loss, Dr. Abradu-Otoo stated that while profit is desirable, the central bank is not always required to generate profits to support economic growth. He highlighted that dividends were paid to the government and reinvested in the bank’s operations in 2021.

Addressing the criticism of Bank of Ghana’s Inflation Targeting Policy, Dr. Abradu-Otoo defended the effectiveness of monetary policy measures in curbing inflation rates. He pointed out that significant strides have been made in reducing non-food inflation, showcasing the impact of monetary policy in that domain.

Despite the temporary financial setback, the Bank of Ghana said it remains steadfast in fulfilling its mandate and expects long-term resilience in its equity and earnings.

Bank of Ghana, moreover, assure the public that in carrying out its functions as banker to Government, it is committed to complying fully with all relevant legal requirements. Bank of Ghana’s operations are constantly guided by the requirements of the Bank of Ghana Act, 2002 (Act 612) as amended.

As indicated in the Finance Minister’s speech, should the need arise for emergency financing by Bank of Ghana in line with the BoG Act, Bank of Ghana said as it was done in the case of the Covid-19 Bond of 2020, it will follow the processes prescribed by the Act.

Meanwhile, the BoG under this government is not new to these accusations. Last year, the Minority Ranking Member on the Finance Committee in Parliament, Hon. Cassiel Ato Forson alleged that the Bank of Ghana printed an amount of GHC 22.04 billion to finance Government’s budget without parliamentary approval. His reaction was in response to the 2022 Mid-Year Fiscal Policy Review which was presented to Parliament by the Minister for Finance last year. However, this accusation was also denied by the central bank.