New accounting system: BoG forced to write off GH¢3.1bn in loans

The Bank of Ghana (BoG) wrote off three times more of its loans in 2018 than it did in 2017.

The action, according to the bank’s 2018 annual report, was largely due to a change in the method used to report the bank’s financial statements.

Last year, when BoG started reporting its financial statements in accordance with the International Financial Reporting Standards Nine (IFRS 9), the bank’s bad loans, technically called impairment losses, rose from 13 per cent of the gross loans and advances in 2017 to 39 per cent.

The increased impairment led to the central bank reporting a net loss of GH¢793.09 million in 2018.

The loss for the year under review was almost half of that of GH¢1.64 billion posted in 2017.

An analysis of the bank’s 2018 report showed that but for the impairment, which was GH¢3.1 billion, BoG could have posted a net profit in excess of GH¢1 billion in that fiscal year.

The impairment was on a gross loan book of GH¢7.88 billion, which was advanced to financial institutions and other quasi-government institutions, according to the annual report.