The Bank of Ghana (BoG) published its audited financial statements for 2025 on May 1, 2026, revealing a net loss of $1.25 billion, significantly widening its cumulative negative equity to approximately $9 billion. This figure, representing about 8% of Ghana’s GDP, places the central bank among those with the largest negative equity positions globally. The delayed release, approved by the board and submitted to the Finance Minister just before the secondary legal deadline, has intensified political debate in Ghana, with the opposition NPP raising concerns over the bank’s financial health.
Understanding the Central Bank’s Operational Losses
The losses stem from a core operational cycle designed to bolster Ghana’s foreign reserves and stabilize the Cedi. The process begins with the BoG creating Cedis to purchase gold from domestic miners, a key strategy given Ghana’s status as Africa’s largest gold producer. This gold is then converted into dollars through international sales or held as a reserve asset. In 2025, the bank purchased approximately 2.9 million fine ounces of gold, valued at roughly $7.6 billion, significantly contributing to reserves reaching a historic high of $13.8 billion by year-end.
However, a critical ‘catch’ arises from the Cedis injected into the economy to buy the gold. To prevent inflation, the BoG must withdraw these circulating Cedis through a process called sterilization. This involves issuing short-term bills (Open Market Operation – OMO bills) to commercial banks, effectively borrowing back the created Cedis at high interest rates. By the end of 2025, outstanding OMO bills had nearly tripled to about $9 billion.
The interest paid on these OMO bills, at rates ranging from 21.5% to 27% through most of 2025, constitutes a major expense. In 2025, the BoG paid $1.34 billion in interest for sterilization costs alone. When compared to its total operating income of approximately $1.01 billion (excluding a one-off sale of gold reserves), and adding operating expenses of $507 million and gold program losses of $724 million, the total expenses reached $3.03 billion, resulting in the $1.25 billion net loss.
Policy Solvency: A Closer Look at Operational Viability
Despite the substantial net loss, the Bank of Ghana reported a “policy solvency surplus” of $440 million for 2025. This metric assesses whether the bank’s operating income covers the costs of its primary objectives, such as preventing inflation and Cedi depreciation. However, this surplus was achieved only due to a one-off gain of $766 million from the sale of a significant portion of the nation’s gold reserves.
Stripping out this non-recurring transaction, the BoG’s core operations revealed a policy solvency deficit of approximately $326 million. This indicates that recurring income streams, such as interest, fees, and trading gains, were insufficient to cover the costs of sterilizing the liquidity injected through the gold purchasing program. The reported policy solvency was thus reliant on asset liquidation rather than sustainable operational income.
Questionable Accounting Practices and Unsettled Receivables
Further scrutiny of the financial statements reveals potentially questionable accounting entries. The “other operating income” line saw a sixfold increase from $28 million in 2024 to $190 million in 2025. A significant portion of this, around $172 million, was attributed to a reimbursement from the Ministry of Finance for Special Drawing Rights (SDR) allocation fees. This reimbursement appears disproportionately high compared to the stated interest costs associated with these allocations, raising questions about the basis of the reimbursement calculation and potentially indicating accounting maneuvers to inflate income.
Additionally, the bank’s “other assets” surged from $771 million to $2.51 billion, partly due to unsettled dollar proceeds from the Gold for Reserves (G4R) program. Approximately $1.2 billion in receivables remain outstanding, raising concerns about counterparty risk and whether the reported reserve position includes claims that are not readily liquid.
Implications of Persistent Negative Equity
While central banks can operate with negative equity without facing insolvency in the conventional sense, the BoG’s situation carries significant implications for Ghana. Firstly, the need for continuous sterilization can create a “treadmill” effect, where mounting interest costs from OMO bills lead to further losses, necessitating more sterilization in a compounding cycle. The annual interest bill alone on outstanding OMO liabilities is substantial.
Secondly, operating losses effectively equate to passive money creation, injecting more Cedis into the economy without corresponding withdrawals, posing a structural inflationary impulse. Thirdly, a structural mismatch exists where the Bank borrows at high domestic interest rates and earns returns at lower international rates, leading to a “negative carry” on its portfolio as long as Ghana’s risk premium keeps domestic rates elevated.
Furthermore, the increasing digitization of the economy erodes seigniorage – the profit from issuing currency – which theoretically offsets central bank losses. Finally, the BoG’s annual losses represent quasi-fiscal deficits, weakening Ghana’s consolidated fiscal position and potentially undermining targets set under its International Monetary Fund (IMF) program.
Recapitalization Challenges and the Future of Gold Reserves
A Memorandum of Understanding signed in January 2025 outlines a phased recapitalization of the BoG by the government between 2026 and 2032, aiming to restore equity from its current negative $9 billion to the new statutory minimum. This requires approximately $9.1 billion over six years, a substantial annual figure equivalent to a significant portion of government revenue and GDP.
However, this recapitalization faces considerable challenges amidst competing fiscal demands, including IMF-mandated fiscal consolidation, ongoing recapitalization of state-owned commercial banks, energy sector arrears, and essential infrastructure and social spending commitments. The government’s proposed method of issuing non-tradeable bonds would address the equity optics but not the underlying operational profitability issues, while adding to the national debt.
The rebranded Gold Accelerated National Reserve Accumulation Programme (GANRAP), formerly the Domestic Gold Purchase Programme (DGPP), continues to be the primary driver of reserve accumulation. Despite its success in boosting reserves, GANRAP faces structural risks: a persistent rate gap between purchase prices and official valuations, high sterilization costs that consume a significant portion of reserve gains, counterparty exposure risks related to GoldBod (the intermediary for artisanal gold purchases), and diminishing marginal returns from further reserve accumulation as import cover levels are already adequate.
Alternative Approaches and What to Watch Next
The article suggests several alternative, lower-cost approaches to reserve accumulation. These include mandating gold royalty payments in-kind, channeling gold purchases through a fiscal agent to avoid new money creation, slowing the pace of accumulation given current reserve adequacy, and restructuring the entire gold channel through models like “Trust-Chain” to enhance transparency and allocate risks more effectively.
The political economy of Ghana presents significant barriers to these reforms, as the current gold program benefits powerful domestic constituencies. As long as the Cedi remains stable and inflation stays low, public apathy towards these complex financial issues is likely to persist.
Citizens should remain concerned about several key issues: the latent inflation risk if OMO bills cannot be rolled over, elevated borrowing costs for businesses and households due to crowded-out private credit, forgone government spending on essential services if recapitalization funds are diverted, and the vulnerability of the Cedi to sharp depreciation if the current overvalued state is unsustainable. The Bank of Ghana’s current operational model, while delivering short-term stability, carries long-term financial risks that constrain its future flexibility. The sustainability of this model and the government’s commitment to recapitalization will be critical factors to monitor.
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