In periods of economic difficulty, central banks like the Bank of Ghana become pivotal actors, yet their actions are often misunderstood, particularly concerning the costs associated with policy interventions. The fundamental role of a central bank is not profit generation but ensuring price stability, maintaining currency confidence, and safeguarding the financial system – essential public goods akin to government-provided infrastructure.
Just as governments invest in roads and public services without expecting direct financial returns, citizens assess infrastructure by its utility, not its profitability. Similarly, the success of a central bank’s policies should be measured by their effectiveness in restoring price stability, reducing uncertainty, and improving economic conditions, rather than their accounting profits, as stated by Christine Lagarde, President of the European Central Bank: “Our job is not to make profits, but to maintain price stability.”
Ghana’s recent economic trajectory exemplifies this principle. The nation navigated a period marked by high inflation, currency volatility, and diminished confidence, which significantly impacted households through increased living costs and reduced purchasing power. Inflation, which stood at 23.8% at the close of 2024, saw a substantial reduction to 5.4% by December 2025, and further declined towards 3.3% in early 2026.
Lending conditions have also improved markedly. Average lending rates decreased from approximately 30.25% in December 2024 to around 20.45% by December 2025. Concurrently, the Monetary Policy Rate dropped from 29% in January 2025 to about 14% by March 2026.
The Ghanaian cedi has demonstrated significant stability, strengthening from its peak near GH¢17 to the dollar to approximately GH¢10–11. This stabilization has eased the cost of imported goods and restored predictability for businesses.
Achieving these positive outcomes necessitated decisive interventions, notably through Open Market Operations (OMOs). To curb inflation, the Bank of Ghana effectively absorbed excess liquidity from the financial system by issuing short-term instruments and offering interest on them. The expenditure for these operations increased from roughly GH¢8.6 billion in 2024 to approximately GH¢16.7 billion in 2025.
While these figures appear as financial expenses on paper, they represent the cost of economic stabilization. Without these measures, persistent excess liquidity would have continued to fuel inflation, imposing a greater burden on households through escalating prices and diminished purchasing power. The central bank effectively absorbed this cost to shield citizens from its direct impact.
The strengthening of Ghana’s external position also highlights this dynamic. As the cedi stabilized and appreciated, imported goods, including fuel and food, became more affordable, alleviating pressure on household budgets and business expenses. However, this appreciation results in accounting costs on the Bank’s balance sheet.
When the cedi strengthens, foreign assets denominated in dollars appear lower when converted into cedi terms, leading to valuation effects. These are accounting adjustments reflecting the very stability that benefits the broader economy, rather than actual losses, and are recorded under Other Comprehensive Income (OCI).
The Bank’s gold reserve program further illustrates how policy benefits can have accounting implications. By acquiring gold domestically and building reserves from local production, Ghana has reduced its dependence on external borrowing, thereby enhancing economic sovereignty and establishing a more sustainable reserve base.
However, due to the method of recording gold purchased at prevailing market dollar rates against the Bank’s official exchange rate, a gap emerges that appears as an accounting cost. The value of the gold reserves themselves remains intact; only the recording method creates this accounting difference.
Similarly, the Domestic Debt Exchange Programme (DDEP) influenced the Bank’s financial position by reducing the income derived from government securities. This reduction is estimated at GH¢13 billion annually, and over GH¢26 billion across two years. This represents foregone income rather than a cash loss, reflecting the Bank’s contribution to broader fiscal stabilization efforts.
This perspective aligns with established economic theory. Milton Friedman, a Nobel laureate economist, famously stated, “Inflation is taxation without legislation.” Unchecked inflation imposes a hidden but pervasive burden on households by eroding wages, diminishing savings, and distorting economic decision-making.
By taking decisive action to reduce inflation, the Bank of Ghana has effectively protected its citizens from this implicit tax. The costs incurred by the central bank can therefore be viewed as a transfer of the economic burden away from households and onto its own balance sheet.
Global precedents support this interpretation. Central banks such as the European Central Bank and the Bank of England have reported substantial accounting costs in recent years, directly attributable to policies implemented for economic stabilization. These outcomes have been recognized not as failures, but as necessary consequences of fulfilling their mandates.
Ultimately, the Bank of Ghana’s actions mirror public investment in infrastructure. A bridge connects communities and facilitates economic activity, just as effective monetary policy anchors prices and expectations, enabling economic stability. Both require resources and may incur short-term costs, but both are crucial for long-term prosperity.
The true measure of success lies not in profit, but in the tangible improvement of citizens’ lives. By this standard, Ghana’s recent economic stabilization efforts present a compelling case.
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