Ghana's Central Bank "Loses" $5 Billion
Unauthorized money printing has pushed inflation to 40%, and almost a million citizens into poverty.
Earlier this week, hundreds of protesters turned out in Ghana's capital city Accra, to demand that the central bank's governor resign over the loss of over 60 billion cedis, or $5 billion, in the 2022 financial year.
The demonstration was led by the opposition party National Democratic Congress (NDC). Participants wore red, and held up signs with slogans such as "Stop the looting, we are suffering".
The NDC claims that the central bank printed money illegally and lent it to the government. This almost inevitably led to soaring inflation. According to a World Bank report, inflation has pushed 850,000 Ghanaians into poverty.
Decades To Recover
Ghana was once an economic success story, but is now barreling towards a major financial crisis. Professor Godfred Bokpin, an economist from the University of Ghana, states that the current situation is unprecedented.
We have never seen anything like this in our history. If the Bank of Ghana wants to recover from this loss... it will take them more than 45 years.
Inflation in the country is running at 40%, and previously topped 50%. Ghana's credit rating has been downgraded by different ratings agencies, meaning it is less able to borrow on the international markets.
Ghana's debt rose to an unsustainable $55 billion by September 2022. Borrowing costs were such that over 70% of its income was needed to service this debt, and the country defaulted.
Lack Of Transparency
The central bank denies the accusations of mismanagement, instead claiming that the losses were caused by fluctuating exchange rates, and because the government borrowed $700 million but did not pay it back.
Any mismanagement has been compounded by a lack of transparency by the central bank. The ability to create money out of thin air, without appropriate checks and balances, has allowed the nation's leaders to bring about a situation in which millions of ordinary people suffer, with little recourse or hope of justice.
Ghana's central bank is piloting a CBDC, known as the E-Cedi. Ironically, the use of blockchain technology could help bring much-needed transparency to the bank's activities. However, as critics have pointed out, it will also enable more effective oppression of protesters.
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