Dr. John Kwakye, the Director of Research at the Institute of Economic Affairs (IEA), has criticized the characterization of the GH¢60.81 billion losses reported by the Bank of Ghana for the year 2022 as merely “technical losses” by the New Patriotic Party flagbearer, Dr. Mahamudu Bawumia. According to Dr. Kwakye, these losses will have significant implications for the operations of the Bank and the country’s economy.
In his analysis titled “Dr. Bawumia’s Speech: Turning an Impossibility into the Possibility?” Dr. Kwakye highlighted the immediate effects of the losses, particularly on inflationary figures. He pointed out that the magnitude of the losses, resulting from significant advances to the government, has contributed to high inflation and currency depreciation.
Dr. Kwakye emphasized that while the Bank of Ghana Act allows for advances to the government, the extent of these advances in 2022, amounting to over 50% of the previous year’s revenue, is alarming. He cited inflation peaking at 54.1% and currency depreciation reaching 54.2% in November 2022 as indicators of the impact of these advances on the economy.
Despite attempts by the Finance Minister and the Bank of Ghana Governor to downplay the losses as technical, Dr. Kwakye argued that the country’s balance sheet has been severely affected. He warned that the Bank may be forced to cut back on important operations to mitigate the impact of these losses.
Overall, Dr. Kwakye’s analysis raises concerns about the economic consequences of the significant losses reported by the Bank of Ghana and underscores the need for careful consideration of fiscal and monetary policies to address these challenges.