There was a legitimate basis for write-offs – BOG replies NDC

Following Monday’s press conference by the NDC claiming that the BOG recklessly wrote off debts owed them without obtaining the relevant parliamentary approval, the BOG has argued that it did no wrong.

In a statement on Wednesday, the BOG pointed out that all issues related to debt restructuring [which the BOG had argued accounted principally for the debt write-offs] were captured in the 2023 budget, whose approval was given by parliament.

However, the Bank maintained that the Finance Ministry would deal with any concerns that went beyond what was approved in the 2023 budget.

“The BoG’s understanding is that the Minister for Finance, in his 2023 budget statement, which was approved by Parliament, had the policy of debt restructuring as a key policy initiative. Any further discussion on parliamentary approvals beyond what was approved in the 2023 budget would be handled by the Ministry of Finance. “

BOG further reasoned that the announcement of the debt restructuring implied an automatic recognition of a credit loss in line with International Financial Reporting Standards (IFRS), hence the need for the Bank to impair all expected losses, with or without approval from authorities.

“The IFRS accounting standard, which requires the full implementation of the expected credit loss (ECL), meant that the mere announcement by the government of a debt restructuring would trigger ECL applications and impairment charged. On this score, the issue of parliamentary approval or not would not stop an ECL application and impairments on the books of BoG. “

Additionally, the Central Bank affirmed that the Finance Minister had later brought a letter to them outlining the details of the debt exchange, thereby providing a satisfactory basis for the impairments.

In their press conference, the NDC accused the BOG of bypassing parliamentary approval in writing of debts purportedly resulting from the domestic debt exchange programme (DDEP), which resulted in a GHC60.8 billion loss.

The party also demanded that the governor of the BOG and his two deputies leave office within 21 days.