Ghana, formerly praised as an economic success story in Africa, is currently dealing with a serious financial crisis that has sparked widespread protests in the capital city of Accra. Following a startling loss of almost 60 billion Ghanaian cedis ($5.2 billion) during the 2022 fiscal year, the protestors are calling for the resignation of the Bank of Ghana governor and his two deputies. The #OccupyBoG demonstrations, which were organized by the opposition, the National Democratic Congress (NDC), have brought attention to a number of important concerns.
The opposition claims that the central bank needlessly printed money to lend to the government, resulting in currency depreciation and soaring inflation. Additionally, they accuse the bank for extravagant spending including a $250 million new office building and over $762,000 in domestic and international travel. The bank's misuse of resources and inefficient investment undermines trust in Ghana's financial system, despite the fact that it is not a commercial organization.
The governor of the central bank, Dr. Ernest Addison, has come under criticism for suspected carelessness and poor administration, and some experts estimate it would take more than 45 years to recoup from this historic loss. However, the bank disputes claims of poor management, attributing the losses to variations in the currency rate and the default of loans made to state organizations. The issue has also gotten worse since the government didn't pay back a $700 million loan it took out from the bank.
Ghana is now experiencing its greatest economic crisis in decades, which is exemplified by a record-breaking 54% inflation rate that is still above 40%. By September 2022, the country's overall debt had increased to $55 billion, leading the administration to request a $3 billion rescue from the International Monetary Fund (IMF). In order to maintain sustainable economic management, this aid was provided subject to strict criteria, most of which centered on lowering debt interest payments.
To achieve this, Ghana's government initiated debt restructuring efforts by renegotiating loan terms with creditors. However, some creditors refused to participate. In August, the Bank of Ghana revealed that the government could not meet the IMF's requirements and would not repay half of the $700 million borrowed from the bank. Instead, the funds would be redirected towards debt restructuring.
This crisis has consequences that go beyond financial figures. A World Bank report estimates that 850,000 Ghanaians have fallen into poverty due to high inflation, impacting their purchasing power and daily lives. Furthermore, the central bank is currently under IMF and governmental investigation, which may limit the scope of any future bailouts.