Annual Report 2014 Prepared and Edited By The Editorial Committee Bank of Ghana P. O. Box GP 2674, Accra Also available on the Bank’s Website: www.bog.gov.gh ISSN: 0855-0972 CONTENTS MANDATE OF THE BANK iv 5.0 INTERNAL DEVELOPMENTS 27 FOREWORD BY THE GOVERNOR 1 BOARD OF DIRECTORS 2 5.1 Overview 27 MANAGEMENT OF THE BANK 3 5.2 Collateral Registry 27 ORGANISATIONAL STRUCTURE 4 5.3 Health 27 5.4 Human Resource Activities 27 1.0 GOVERNANCE 5 5.5 Training 28 5.6 Security 28 1.1 The Board of Directors 5 5.7 Study Visits 28 1.2 Membership of the Board 5 5.8 ISO 27001:2005 Certification 28 1.3 Committees of the Board 5 --------------------------------------------------------------------- 1.4 The Monetary Policy Committee 6 6.0 EXTERNAL RELATIONS 29 --------------------------------------------------------------------- 2.0 DEVELOPMENTS IN THE GLOBAL ECONOMY 7 6.1 Overview 29 6.2 International Monetary Fund and the 2.1 Overview 7 World Bank Meetings 29 2.2 World Output Growth 7 6.3 Association of African Central Banks (AACB) 30 2.3 Global Prices 7 6.4 African Export-Import Bank (AFREXIMBANK) 30 2.4 Commodities Market 8 6.5 The African Development Bank (AfDB) 31 --------------------------------------------------------------------- 6.6 West African Monetary Zone (WAMZ) 31 3.0 DEVELOPMENTS IN THE GHANAIAN 6.7 The West African Monetary Agency (WAMA) 32 ECONOMY 9 6.8 West African Institute for Financial and Economic Management (WAIFEM) 33 3.1 Overview 9 --------------------------------------------------------------------- 3.2 Monetary Policy 9 7.0 FINANCIAL STATEMENTS 35 3.3 Monetary Developments 11 3.4 Stock Market Developments 14 7.1 General Information 37 3.5 Price Developments 14 7.2 Report of the Directors 38 3.6 Real Sector Performance 15 7.3 Independent Auditor’s Report 40 3.7 Exchange Rate Developments 15 7.4 Statement of Profit or Loss 41 3.8 Fiscal Developments 17 7.5 Statement of Other Comprehensive Income 42 3.9 External Sector Developments 18 7.6 Statement Of Financial Position 43 3.10 External Debt 20 7.7 Statement of Changes in Equity 44 --------------------------------------------------------------------- 7.8 Statement Cash Flow 45 4.0 DEVELOPMENTS IN BANKS AND NON-BANK 7.9 Notes to the Financial Statements 46 FINANCIAL INSTITUTIONS 21 4.1 Overview 21 4.2 Banks and Non-Bank Financial Institutions 21 4.3 Stability of the Financial System 22 4.4 Developments in the Payments and Settlement Systems 23 4.5 Anti-Money Laundering/Combating the Finance of Terrorism (AML/CFT) 26 iii MANDATE OF THE BANK ● To Maintain Stability In The General Level Of Prices ● To Ensure Efficient Operations Of The Banking And Credit Systems ● To Support General Economic Growth take a prudent approach and implement forward-looking measures to ensure that the financial system remains safe, sound and stable. In this connection, the Bank of Ghana is committed to strengthening the legal framework for supervising and regu- lating the financial system. Accordingly, the Bank will submit to Parliament the Banks and Specialised Deposit-Taking In- stitutions Bill and Ghana Deposit Protection Bill to help clar- ify the current legal framework and strengthen the central bank’s supervisory and resolution powers in line with inter- national best practices. The Bank launched a 5-year National Payment Systems Strat- egy in August to drive the development of the country’s pay- ment systems. The aim was to develop an integrated local cross-border and multi-currency payment roadmap to ensure an efficient, safe and secure payment system in Ghana. The year 2014 was quite challenging for the nation. The Gha- naian economy continued to contend with both domestic and The Bank continued to maintain good relations with both external shocks which reflected in subdued economic activity, multilateral and bilateral partners. To this end, the Bank par- rising inflation and a significant depreciation of the cedi. ticipated actively in both regional and international meetings and other activities. Unfavourable global developments such as softening com- modity prices, subdued demand, reduced FDI flows and vola- During the year, Dr. Augustine Fritz Gockel was appointed a tility in financial markets impacted adversely on the domestic Non-Executive Director to replace Mrs. Clara Arthur, who re- economy. The decline in commodity prices contributed to the signed from the Board. On behalf of the Board, Management rapid depreciation of the domestic currency. and staff of the Bank, I welcome and congratulate Dr. Gockel on his appointment and thank Mrs. Arthur for her invaluable On the domestic front, the main challenges to the economy contributions to the governance of the Bank. I would also like related to the continued energy supply constraints, pressures to take this opportunity to place on record my immense grati- in the foreign exchange market and lingering fiscal imbal- tude to Dr. Nii Kwaku Sowa who voluntarily stepped down as ances. a member of the MPC after twelve years of dedicated service. The Bank benefited immensely from his intellectual support Real GDP growth slowed to 4 per cent from 7.3 per cent in and wise counsel. It is also my privilege to welcome Profes- the previous year. This development was largely due to sup- sor Joshua Abor, Dean of the University of Ghana Business ply side constraints which included energy supply challenges, School, to the MPC. sharp depreciation of the domestic currency and lower com- modity prices. Let me also thank the Board, Management, and Staff of the Bank for their dedication, hard work and professionalism Inflation pressures were elevated in the year, requiring neces- throughout the year. sary policy adjustments. The rising inflation was on account of fiscal imbalances and the associated high liquidity that fed The year ahead is going to be very challenging. Late in 2014, demand pressures; the pass-through effects of a rapidly de- the Government opted for a 3-year IMF Extended Credit Facil- preciating cedi; and upward adjustments of petroleum prices ity which among others will help restore debt sustainability and utility tariffs. As a result, the monetary policy stance was and macroeconomic stability. Our role as a central bank is tightened with the Monetary Policy Rate raised by a cumu- critical in the successful execution of this medium-term eco- lative 500 basis points during the year. The policy rate ad- nomic reform programme and I wish to entreat staff to put in justments were done in concert with other macro-prudential their maximum best as we implement these policies for the measures such as revisions of the DMBs cash reserve ratio benefit of the Ghanaian economy. and net open position limits. The measures were to address liquidity problems in both money and foreign exchange mar- Thank you. kets. These notwithstanding, inflation rose steadily from 13.5 per cent in December 2013 to 17.0 per cent at the end of 2014 against a forecast of 13.0 ±2.0 per cent. Financial soundness indicators show that Ghana’s financial system remained robust in the review year. The sector grew Dr. Henry A. K. Wampah strongly and continued to be resilient, liquid and profitable despite shocks from the cedi depreciation and economic slowdown. However, the Bank is conscious of the need to 1 BOARD OF DIRECTORS Mr. Millison K. Narh Dr. Henry A. K. Wampah Dr. Abdul-Nashiru Issahaku First Deputy Governor Governor Second Deputy Governor Dr. Sydney Y. Laryea Mr. Kwaku Bram-Larbi Mrs. Diana A. Ayettey Hon. Cassiel Ato Forson Chartered Accountant Legal Practitioner Economist Chartered Accountant (Deputy Minister of Finance) Mr. Sam Appah Dr. David Obu Andah Mr. Alexander Y. Kyei Prof. Kwabena A. Anaman Commodity Marketing Banker and Consultant Economist Agricultural Economist/Lecturer Consultant Dr A. Fritz Gockel Mrs Caroline Otoo Economist Secretary to the Board 2 BANK OF GHANA MANAGEMENT OF THE BANK TOP MANAGEMENT Mr. Millison K. Narh Dr. Henry A.K. Wampah Dr. Abdul-Nashiru Issahaku First Deputy Governor Governor Second Deputy Governor Mr. Daniel Hagan Mrs. Caroline Otoo Mr. Yao A. Abalo Estates and Projects The Secretary Treasury Department HEADS OF DEPARTMENT Mrs. Elly Ohene-Adu Mrs. Caroline Otoo Mr. Franklin Belnye Banking Secretary’s Banking Supervision Ms. Catherine Ashley Mr. Stephen Amegashie Mr. Raymond Amanfu Currency Management Governors Other Financial Institutions Supervision Mr. Daniel Hagan Mr. Felix Adu Estates and Projects Internal Audit Mrs. Grace Akrofi Research Mr. Simeon Kyei Mr. Yao A. Abalo Human Resource Treasury Dr. (Mrs) Esther N. K. Kitcher Medical Mrs. Mary Edwards Mr. Yaw Afrifa-Mensah Information, Documentation and Security Dr. Benjamin Amoah Publications Services Financial Stability Mr. Madoc Quaye Mr. Stephen S. Sapati Centre for Training & Professional Finance Development Mr. Andrew Boye-Doe Ms. Gloria Quartey Legal Risk Management Mr. Michael Oppong-Adusah Mr. John Fummey Collateral Registry Information Technology Mr. Charles Brew - Hammond Procurement and Transport REGIONAL MANAGERS Mr. Michael Anyamesem Mr. Paul Mensah – Ashun Jnr. Mr. Peter Ntsiful Kumasi, Ashanti Region Takoradi, Western Region Sunyani, Brong-Ahafo Region Mr. Victor Akakpo Mr. Jacob Tei Kudah Mr. William Ntow Hohoe, Volta Region Tamale, Northern Region Sefwi-Boako Currency Office Western Region 3 2014 ANNUAL REPORT ORGANISATIONAL STRUCTURE DEPARTMENTS Banking Currency Management FIRST DEPUTY Estates and Projects GOVERNOR Human Resource Information, Documentation and Publications Services Centre for Training & Professional Development Information Technology Risk Management Procurement and Transport Secretary’s BOARD OF Governors DIRECTORS GOVERNOR Internal Audit Treasury Security Banking Supervision Monetary Policy Committee Other Financial Institutions Supervision Finance Research Financial Stability SECOND DEPUTY GOVERNOR Medical Legal Collateral Registry 4 BANK OF GHANA CHAPTER 1: GOVERNANCE 1.1 The Board of Directors Audit Committee The governing body of the Bank, as stipulated in the Bank The Committee ensures that appropriate and adequate of Ghana Act, 2002 (Act 612), is the Board of Directors, accounting procedures and controls are established.