Ghana’s Deputy Finance Minister-designate, Thomas Nyarko Ampem, has firmly ruled out taxpayer-funded support to recapitalize the crisis-hit Bank of Ghana (BoG), defying calls for a public bailout as the central bank grapples with record losses exceeding GH₵70 billion over two years.
Appearing before Parliament’s Appointments Committee on Wednesday, Ampem argued that injecting state funds into the BoG would impose an “undue strain” on citizens already weathering economic turbulence, instead expressing confidence that the institution could “return to profitability” through operational reforms and broader economic recovery.
The BoG’s financial woes, detailed in its 2022 and 2023 annual reports, stem largely from its exposure to Ghana’s Domestic Debt Exchange Program (DDEP), a government-led restructuring effort to stabilize public finances. The central bank absorbed a staggering GH₵60.8 billion loss in 2022—its worst performance in history—followed by an additional GH₵10 billion deficit last year, leaving it with negative equity of GH₵66 billion. While former BoG Governor Dr. Ernest Addison has repeatedly downplayed risks to the bank’s solvency, critics warn that its eroded balance sheet could weaken its capacity to manage inflation, defend the cedi, or respond to financial shocks.
“Pouring public funds into the BoG now would signal panic, not prudence,” Ampem asserted, framing the government’s hands-off approach as a commitment to fiscal discipline. His stance aligns with the administration’s broader austerity measures, including IMF-mandated spending cuts under a $3 billion bailout program. Yet the position has drawn mixed reactions. Proponents argue it pressures the BoG to streamline operations and avoid risky exposures, while skeptics contend that delaying recapitalization risks institutional credibility. “A central bank with negative equity is like a fire department without water,” warned Accra-based economist Nana Ama Agyemang. “It may function until the next crisis—then what?”
The BoG’s troubles underscore deeper tensions in Ghana’s economic strategy. The DDEP, while crucial for restoring debt sustainability, has strained domestic financial institutions, with banks and pension funds also reeling from bondholder haircuts. Opposition lawmakers have seized on the BoG’s losses to demand accountability, questioning oversight failures and urging parliamentary probes into the bank’s risk management. “How does a central bank lose 80% of its capital in one year?” asked Cassiel Ato Forson. “This isn’t just bad luck—it’s a governance collapse.”
For now, the government appears to be hedging its bets on Ghana’s macroeconomic rebound. Inflation has cooled from a 2023 peak of 54% to 23% this year, while the cedi remains relatively stable. If growth accelerates as projected, improved tax revenues and debt relief could ease fiscal pressures. But analysts caution that the BoG’s path to self-recovery hinges on sustained stability—a precarious assumption given global oil price volatility and election-year spending risks ahead of 2024 polls.
The debate also spotlights Africa’s wider central banking challenges. Nigeria and Kenya have similarly grappled with undercapitalized central banks amid currency crises, though direct state bailouts remain rare. Ghana’s experiment with self-driven recovery, if successful, could embolden others to resist fiscal rescues. But the stakes are uniquely high: as the anchor of Ghana’s financial system, a hobbled BoG could undermine hard-won gains in inflation control and investor confidence.
As Ampem’s nomination moves toward parliamentary approval, his stance signals a government prioritizing short-term fiscal restraint over institutional safeguards. Whether that calculus pays off—or backfires—will shape not just the BoG’s future, but Ghana’s ability to navigate the next storm.
