Accra, Ghana – In May, the Bank of Ghana (BoG) released its 2025 audited financial statements, revealing an operating loss of GH¢15.6 billion. This figure has sparked significant political debate, with critics portraying the central bank as financially mismanaged and a drain on national resources. However, a deeper analysis suggests this loss is a calculated policy measure, essential for stabilizing the Ghanaian economy during a period of significant financial stress.
Understanding the Central Bank’s Role
It is crucial to differentiate the operational mandate of a central bank from that of a commercial entity. Unlike a business, a central bank’s primary objective, as stipulated by the Bank of Ghana Act, is to maintain price stability, not to generate profit. The BoG acts as the “Banker” in the national economy, possessing the unique ability to issue currency and manage liquidity, rather than being a player subject to market bankruptcy.
The Genesis of the Balance Sheet Strain
The current financial strain on the BoG’s balance sheet originates from the sovereign debt crisis that emerged in 2022. During the Domestic Debt Exchange Programme (DDEP), the BoG was compelled to absorb a substantial haircut, approximately 50%, on a significant portion of government securities it held. This event led to an initial loss of GH¢60.9 billion in 2022, initiating a cycle of negative equity that has now reached GH¢96.28 billion on paper.
Open Market Operations: The Cost of Liquidity Management
A substantial portion of the GH¢15.6 billion loss in 2025 is attributable to Open Market Operations (OMOs). In 2025, the BoG allocated GH¢16.73 billion to OMOs, a significant increase from the previous year. These operations involve the central bank paying commercial banks to hold excess liquidity, effectively removing it from the broader economy.
This policy is designed to prevent excessive money supply from chasing limited goods and foreign exchange. Without these OMOs, such excess liquidity would likely flood the market, driving up inflation and devaluing the Ghanaian Cedi. The cost of these OMOs, therefore, represents a deliberate policy expense to maintain economic stability.
Addressing the ‘Original Sin’
Critics argue that the need for costly OMOs stems from past instances where the BoG may have financed government deficits, a practice known as fiscal dominance. The current losses are seen by some as the necessary “clean-up” cost for these past actions, akin to paying for damage control after an incident.
The BoG’s mandate under Section 3 of its Act prioritizes price stability above all else. If the bank were to cease OMOs to improve its profitability, the immediate consequence would be a surge in inflation, severely impacting the cost of living for ordinary Ghanaians. The GH¢15.6 billion loss is, in essence, a subsidy that has helped to mitigate the dramatic rise in the prices of essential goods, such as bread.
Implications and Future Outlook
The Bank of Ghana’s actions demonstrate a strategic choice to absorb economic shocks internally, acting as a buffer for the nation during a sovereign debt crisis. By intentionally weakening its own balance sheet through OMOs and other stabilization measures, the central bank has shielded citizens from the full brunt of potential hyperinflation and currency collapse. The significant operating loss is not a sign of failure but a testament to the difficult trade-offs required to maintain macroeconomic stability in a challenging fiscal environment. As the economy navigates its recovery, continued vigilance on inflation and the BoG’s liquidity management strategies will be critical indicators to watch.
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