Introduction
The release of the Bank of Ghana’s audited financial statements for the 2025 fiscal year has started
a major debate about central bank accounting and economic stability. The financial statements
show that the central bank recorded an operational loss of GH¢ 15,630,122 in its formal ledger
(representing thousands, which translates to a GH¢ 15.63 billion deficit). The broader costs of
managing liquidity drove the widely discussed GH¢ 16.7 billion figures mentioned in
parliamentary debates. This represents one of the largest financial deficits recorded by the
institution since the local currency was redenominated. It has drawn severe criticism from
opposition figures and strong defenses from the Majority in Parliament and allied economists.
However, a look at the economic reasons behind this deficit reveals a reality that commercial
accounting standards cannot fully explain. The recorded losses do not mean the Bank was
mismanaged, inefficient, or failing. Instead, the GH¢ 15.63 billion loss is the direct accounting
result of an aggressive and successful monetary policy intervention. The central bank took these
steps to rescue the Ghanaian economy from high inflation, currency depreciation, and a structural
recession.
To properly evaluate the Bank of Ghana’s financial position, we must separate commercial
accounting rules from modern central banking principles. In the commercial banking sector, a
multi-billion-cedi loss means a bank is insolvent and requires immediate regulatory takeover. In
central banking, especially in an emerging market recovering from a debt crisis, a balance sheet
loss often means the central bank absorbed economic risk to protect the country. The Bank of
Ghana deliberately used its balance sheet to mop up excess money in the system, control inflation
expectations, and defend the value of the cedi. The central bank took the financial hit internally,
but the economic benefits such as lower inflation, reduced commercial lending rates, and a return
to GDP growth were shared across the entire country.
This report provides a detailed examination of the Bank of Ghana’s 2025 financial losses. By
breaking down the specific causes of the deficit namely, the high cost of absorbing excess liquidity,
the accounting rules of the Domestic Gold Purchase Programme, and the paper losses caused by
currency appreciation. It further explains why the central bank’s financial sacrifice was necessary.
Central Bank Solvency Versus Commercial Solvency
Before analyzing the specific items that caused the Bank of Ghana’s deficit, it is important to
understand how central bank profitability works. The immediate reaction of many financial
analysts and political commentators is to view negative equity or sustained operational losses as a
sign of bankruptcy. However, academic and institutional research shows that central banks do not
face the same financial risks as commercial companies.
A commercial bank facing a GH¢ 15.6 billion deficit would experience an immediate liquidity
crisis and collapse. This is because a commercial bank relies on public confidence to keep its
deposits and must settle its debts using a currency it cannot create. A central bank operates
differently. Because it is the sole issuer of the national currency, a central bank cannot run out of
money or go technically bankrupt in its own jurisdiction. It can always meet its domestic currency
obligations.
The Bank for International Settlements (BIS), the global organization for central banks, addressed
this specific issue in its Bulletin No. 68, “Why are central banks reporting losses? Does it matter?”.
The BIS stated clearly that central bank losses, and even negative equity, do not stop a central bank
from operating effectively and fulfilling its economic duties. The bulletin explains that central
banks must not be judged by the profits on their balance sheets. Instead, they should be judged by
their success in achieving their policy goals: price stability, currency stability, and economic
growth.
Academic literature supports the necessity of the Bank of Ghana’s current financial position. In a
National Bureau of Economic Research (NBER) working paper, economists Robert E. Hall and
Ricardo Reis analyzed the exact situation currently happening in Ghana’s financial system. They
examined the “new style of central banking,” where central banks borrow heavily from domestic
commercial banks in the form of interest-paying reserves to stabilize the economy.
When a central bank pays high interest rates on these reserves to fight inflation, while holding low-
yielding assets such as the restructured domestic bonds held by the Bank of Ghana, it will
inevitably suffer massive operational losses. Hall and Reis conclude that this mismatch in assets
and liabilities is a predictable part of modern crisis management. The real risk to the economy is
not the central bank losing money on paper, but political pressure forcing the central bank to stop
its inflation-fighting measures too early.
Historical research also shows that the costs of defending a currency or building foreign exchange
reserves are standard for central banks in emerging markets. Accumulating reserves changes the
balance sheet, exposing the central bank to capital losses when the local currency eventually
appreciates.
Deconstructing the 2025 Financial Deficit
To understand the size and necessity of the Bank of Ghana’s financial losses, we must look at the
specific operations that caused the GH¢ 15.63 billion deficit. This loss was not caused by
administrative waste. It was the mathematical result of a severe mismatch in interest rates,
combined with foreign exchange adjustments and gold accumulation. This mismatch was an
unavoidable part of the monetary tightening required to stabilize the economy.
The largest driver of the Bank of Ghana’s 2025 financial loss was the cost of open market
operations, specifically systemic liquidity management. Before 2024, the Ghanaian economy had
too much liquidity (money supply), driven mainly by government spending and the monetization
of fiscal deficits when the nation could not borrow from international markets. This excess money
chased a limited supply of goods and foreign exchange, causing the cedi to depreciate rapidly and
inflation to hit 54 percent.
To stop this inflation, the Bank of Ghana had to intervene in the money markets. The central bank’s
main tool was issuing short-term sterilization bills. This meant borrowing money from the
commercial banking sector to lock it away and remove it from circulation. By reducing the amount
of cedis in the economy, the central bank successfully lowered demand, stopped capital flight, and
cooled inflation.
However, this victory came at a high cost. To convince commercial banks to park their money
with the central bank rather than lending it out or using it to buy dollars, the Bank of Ghana had to
offer very high interest rates. During the peak of the tightening cycle in early 2025, the Monetary
Policy Rate was between 27.00 percent and 28.00 percent. As a result, the central bank paid
massive interest expenses to keep this money out of the system. The direct cost of absorbing this
excess money from the banking industry rose from about GH¢ 8.6 billion in 2024 to GH¢ 16.7
billion in 2025.
This expense was made worse by the Domestic Debt Exchange Programme (DDEP). During the
debt restructuring, the Bank of Ghana took significant losses on its government securities,
converting high-yielding government debt into restructured bonds that offered very low returns.
As a result, the central bank was trapped in a negative carry position: it held low-yielding
government bonds while paying high interest on the sterilization bills it issued to commercial
banks. The GH¢ 15.63 billion loss is largely the cost of this negative carry. The central bank
essentially paid the commercial banks billions of cedis to stop the currency from depreciating and
to protect the purchasing power of citizens.
The second major part of the central bank’s deficit comes from the accounting of foreign
exchange reserves. In commercial business, a stronger domestic currency is usually a good sign.
However, for a central bank holding foreign currency assets, a stronger domestic currency
creates unavoidable paper losses on the balance sheet.
Throughout 2024 and 2025, the Bank of Ghana’s strict policies successfully stabilized and
strengthened the cedi against the United States dollar. As the cedi grew stronger, it lowered the
cost of imported goods, helping ordinary citizens and domestic manufacturers. But accounting
standards require that foreign currency reserves be translated into the local currency at the end of
the reporting period.
For instance, if the central bank holds $100 in reserves when the exchange rate is GH¢ 17 to $1,
the balance sheet records GH¢ 1,700. If the Bank’s policies strengthen the cedi to GH¢ 10 to $1,
that $100 bill is still worth $100 internationally. However, on the domestic balance sheet, its
recorded value drops to GH¢ 1,000.
This GH¢ 700 difference is recorded as a foreign exchange (FX) valuation loss. This does not
mean physical cash left the central bank, nor does it reduce the country’s international purchasing
power. The recorded loss is purely an accounting effect caused by the local currency getting
stronger. Therefore, a large portion of the Bank of Ghana’s deficit is the mathematical result of its
success in strengthening the cedi.
The third main reason for the 2025 deficit was the expansion of the Domestic Gold Purchase
Programme (DGPP). The DGPP was created to build foreign exchange reserves without putting
pressure on the cedi in the open market. The Bank of Ghana purchased gold directly from domestic
mining firms using local currency. This physical gold was then added to the nation’s international
reserves.
In 2025, the Bank of Ghana expanded this programme significantly, increasing annual purchases
from 54.7 tons to 111 tons. This initiative was a major economic success, strengthening the
external sector and helping Ghana reach a current account surplus of 3.0 percent of GDP by mid-2025. The programme generated a cumulative equivalent of $11 billion in value for the state,
greatly increasing Ghana’s international reserves and stabilizing the cedi.
However, running this programme required massive upfront financing in domestic currency. The
central bank injected billions of cedis into the economy to buy the gold. To prevent this new money
from causing inflation, the Bank of Ghana had to immediately sterilize the liquidity, issuing more
high-interest short-term bills to pull the cedis back out. The direct accounting cost of executing the
gold purchase programme in 2025 was GH¢ 9 billion.
While this GH¢ 9 billion cost showed up as a loss on the central bank’s books, the $11 billion in
generated foreign exchange value benefited the entire nation. In fact, official reports indicate that
without a GH¢ 9.57 billion gain from refined gold sales under this programme, the Bank’s 2025
loss would have exceeded GH¢ 25 billion. Recognizing the accounting burden this placed on the central bank, the legislature passed the Ghana Gold Reserve Act to transfer the pre-financing budget to the Ministry of Finance in future years. Furthermore, the International Monetary Fund (IMF) clarified that the “quasi-fiscal losses” recorded from this programme were simply policy accounting outcomes, not a sign of failure, and emphasized that the DGPP successfully eased pressure on the foreign currency market.
The Economic Dividends: Quantifying the Return on Investment
We cannot evaluate the Bank of Ghana’s GH¢ 15.63 billion loss without looking at the broader
economy. The benefits of the central bank’s actions are highly visible across every major economic
indicator in Ghana. The most important result of the central bank’s costly liquidity management was the sharp drop in inflation. Before these policies took full effect, Ghana faced a severe inflation rate of 54 percent. At that level, businesses cannot plan, and citizens lose their purchasing power rapidly.
The Bank of Ghana’s decision to absorb excess money at a high cost broke this inflation trend. By October 2025, inflation had fallen to 8.0 percent. This downward momentum continued into early 2025. Headline inflation dropped to 3.8 percent in January, 3.3 percent in February, and reached a near three-decade low of 3.2 percent by March 2026.
| Inflation Indicator | Peak Crisis Period | January 2026 | February 2026 | March 2026 |
| Headline Inflation Rate (YoY) | 54.00% | 3.80% | 3.30% | 3.20% |
| Trend Analysis | Hyperinflationary | 13th Month Decline | 14th Month Decline | 15th Month Decline |
The drop from 54 percent to 3.2 percent is a massive success. The central bank’s aggressive
interventions removed the money that was driving up prices, and the stronger cedi lowered the
cost of imported goods. The high institutional cost resulted in an eighteen-percentage-point dro
in core inflation, providing undeniable relief to the public.
The second major benefit of the central bank’s policy was the normalization of domestic interest
rates. During the crisis, the central bank maintained a high Monetary Policy Rate of up to 28.00
percent to fight inflation.
As inflation plummeted, the Bank of Ghana was able to begin cutting rates. This directly lowered
the cost of borrowing for private businesses. The Average Lending Rate fell from 30.12 percent in
February 2025 to 22.22 percent by October 2025. The Ghana Reference Rate (GRR), which banks
use to price loans, dropped from 29.72 percent to 17.86 percent over the same period. By March
2026, the central bank confidently cut the policy rate to 14.00 percent.
This reduction in borrowing costs served as a lifeline for small and medium enterprises (SMEs) in
the real economy. For example, high interest rates had previously suppressed lending to the
agriculture sector, which employs over 40% of Ghanaians. With the rate cuts, agribusinesses could
suddenly afford processing unit loans at reduced interest, shortening payback periods and enabling
export growth. Manufacturers burdened by non-performing loans were able to refinance
equipment and boost productivity. As a direct result of the central bank easing conditions, private
sector credit expanded by 13.9% in the year leading up to October 2025.
| Interest Rate Indicator | January 2025 | March 2025 | June 2025 | October 2025 |
| Monetary Policy Rate (MPR) | 27.00% | 28.00% | 28.00% | 21.50% |
| Average Lending Rate | 30.07% | 29.18% | 27.00% | 22.22% |
| Ghana Reference Rate (GRR) | 29.72% | Declining | Declining | 17.86% |
| 91-Day Treasury Bill Yield | 28.37% | Declining | Declining | 10.63% |
By using its balance sheet to remove economic uncertainty, the Bank of Ghana paved the way for
growth. Real GDP grew by 6.3 percent year-over-year in the first and second quarters of 2025.
This growth was driven heavily by the services and agricultural sectors. Total GDP growth for
2025 was upgraded to 4.8 percent. The stability also revitalized the stock market. The Ghana Stock Exchange Composite Index (GSE-CI) grew by 127.4 percent by February 2026 compared to the previous year. Sectoral performance was very strong, with Agriculture stocks growing 175.9 percent and Financial stocks growing 157.4 percent.
Conclusion
The GH¢ 15,630,122 deficit reported by the Bank of Ghana is a large number when viewed in
isolation. However, economic health is not measured by isolated accounting entries. A detailed
review of the data and economic principles proves that this financial loss was necessary to rescue
and rebuild the Ghanaian economy. The ultimate proof that the Bank of Ghana’s policies were effective comes from the International Monetary Fund (IMF). In December 2025, Ghana successfully completed the 5th Review of the IMF Extended Credit Facility (ECF) programme.
The IMF explicitly praised Ghana’s “significant macroeconomic progress,” noting that
stabilization efforts were gaining strong momentum. The IMF highlighted that Ghana achieved
single-digit inflation for the first time since 2021, largely due to the currency appreciation
engineered by the Bank of Ghana.
The IMF also commended the central bank’s reserve accumulation strategy. The report noted that
gross international reserves were projected to reach $8,625 million by the end of 2025, providing
3.3 months of import cover.16 The IMF’s assessment confirms that the central bank’s interventions
were not only appropriate but highly effective.
The central bank faced a crisis of 54 percent inflation and a depreciating currency. To fix this, it
issued high-yielding sterilization bills to absorb excess money, trapping itself in a costly position
against low-yielding restructured assets. It also spent billions of cedis financing domestic gold
purchases to stockpile $11 billion in international reserves. As its policies strengthened the cedi, it
naturally absorbed the foreign exchange paper losses that mathematically followed.
The benefits of this financial sacrifice are clear. Inflation collapsed to 3.2 percent, the policy rate
was cut to 14.00 percent, commercial lending rates dropped, and private sector credit expanded.
Real GDP is growing, and the IMF has praised the rapid recovery.
Political attempts to label the central bank’s 2025 deficit as a management failure rely on applying
standard corporate accounting rules to central banking. A central bank’s operational loss does not
impair its ability to function. The true measure of a central bank is the stability of the economy it
manages.
The Bank of Ghana’s 2025 deficit should be viewed as the price paid to secure price stability, a
strong exchange rate, and national economic survival. The institution absorbed the shock on its
balance sheet so that the nation’s citizens and businesses did not have to.
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