The Bank of Ghana (BoG) says GH₵53.1 billion of the total loss of GH₵60 billion occurred as a result of government's Domestic Debt Exchange Programme (DDEP).

According to a statement from the Bank, BoG stepped in to arrest a major economic and social crisis since the domestic auction was failing.

According to BoG, further downgrade of Ghana’s sovereign debt rating which blocked Ghana’s access to international capital market borrowing triggered a liquidity crisis, spilling over into a balance of payments crisis.

It added that “In 2 months, the Bank of Ghana lost US$500 million in reserves and built significant overdraft with the government as a result of the auction failures.

“It became clear that Ghana was on a path that was unsustainable, and the Government had to approach the IMF for support in July 2022. The IMF process included putting into place a credible programme of reform, which included restructuring the total government debt to sustainable levels.

"Until the Staff Level Agreement with the IMF was reached in December 2022, the Bank of Ghana had to continue to provide the necessary support to keep the economy running.”

The statement further noted that "In line with the provisions of the Bank of Ghana Act, (Act 612), as amended, the Bank informed the Minister of the developments in its finances.

"The Minister reported this to Parliament as part of his briefing to Parliament on the IMF programme and the Domestic Debt Exchange."

It added that "a major plank of the corrective action required for the IMF programme was the Domestic Debt Exchange, where the stock of Government of Ghana debt was to be halved from 105% of GDP to 55% of GDP by 2028.

"The holders of Government debt had their debt instruments exchanged for new ones with lower interest payments and longer terms. Despite the losses inflicted on households and banks, the threshold of 55% of GDP was not met."

The Bank of Ghana was used to close the gap to enable Ghana to meet the debt threshold that qualified Ghana for the IMF programme (the Bank of Ghana, therefore, acted as a loss absorber).

This means the Bank of Ghana had to absorb a 50% haircut on its non-marketable holdings of Government debt instruments.

This singular act, according to the bank, "led to significant impairment losses of GH₵32.3 billion to the Bank’s accounts.

Impairments of marketable instruments also accounted for another GH₵16.1 billion, bringing the total impairments of Government holdings to GH₵48.4 billion."