After seeing the “Book of Explanations” from a senior staffer at the Ministry of Finance, I’d like to add a few points.
First, on either the Monetary or Fiscal side, losses exceeding US$200 million have occurred. (Let others argue why). That makes it a sovereign loss. A loss to the state of Ghana.
Secondly, at issue, which has been a long-held position by the IMF when dealing with borrowing countries, from Europe to Africa, is that this type of sovereign loss – arising out of transactional activities of an SOE like GoldBod should properly be domiciled on the fiscal side of the books.
The government, true to its track record, is trying to “hide” the loss on the monetary side (on the books of the Bank of Ghana) so it can be treated as a normal loss arising out of the commercial/or trading activities of the Central Bank.
This has happened on a large scale in the past when the pre-2017 NDC government hid lots of SOE debts on the books of the SOEs, away from the Central government, in a bid to show a much lower level of debt than there is.
In the end, the NPP government had to “swallow” all of it as what were merely contingent risks crystalised, under the weight of COVID, and had to be one of the major causes of how deep the DDEP had to go.
What the IMF is simply saying is this: this US$214 M loss should, properly treated, be added to the national debt, (on the fiscal side).
It is the result of the activities of an SOE similar to the Energy Sector SOEs and COCOBOD whose debts became part of the total debt we had to absorb and restructure painfully.
They are saying, please, don’t do this again. Don’t hide debts, which will come back and bite you as a sovereign. Ghana. Irrespective of which government is in office.
Of course we all know who messes it up and who cleans it up and gets politically punished for doing “good”). The IMF is helping Ghana avoid a future meltdown.
The last time we tried to fix this mess, the Central Bank was also deeply affected. Don’t go and hide fiscal “debts” on their monetary balance sheet.
Beyond the political ping-pong of whether Goldbod is “making money” or not, the adults in the room, from the Finance Minister and his advisors, and the President, should not undo the good but extremely painful work the NPP government did on their behalf (and which it took the political hit for).
Lastly, forget the fluff wrapped in English. There’s no mystery as to what the government is intending to do, and what the IMF is saying don’t.
GoldBod has suddenly become an SOE which poses a larger than average systemic (fiscal) risk, and the IMF is right in sounding the alarm bells now.
Before it becomes another Energy SOE hellscape (with all the scandalous take-or pay contracts that we are still paying dearly for!). Merry Christmas!
