Ghana’s Central Bank Trims Losses, but Challenges Persist
Ghana’s central bank, the Bank of Ghana (BoG), has been slowly climbing back from a financial crisis. In 2024 the BoG posted an operating loss of GH¢9.49 billion, a notable improvement from the GH¢13.23 billion loss (restated) in 2023. This trend marks a sharp turnaround from 2022, when the BoG recorded a staggering loss of GH¢60.8 billion amid the country’s economic turmoil. The latest financial statements (released 5 June 2025) even show a net comprehensive profit of about GH¢4.02 billion for 2024, indicating that after accounting for valuation gains and other comprehensive items, the bank’s overall position improved slightly.
Despite these gains, lingering pain remains. The BoG’s equity is still deeply negative (approximately -GH¢61.3 billion as of end-2024), reflecting the heavy losses accumulated during Ghana’s recent debt and currency crisis. In other words, liabilities still far exceed assets on the central bank’s balance sheet. The 2024 profit is a modest recovery, but by no means a full rehabilitation of the bank’s finances, much like a patient stabilizing after a crisis but not yet fully healed. BoG officials noted that the latest results “saw improvements in the bank’s financial performance” while acknowledging that the financial system remains under pressure.
Why Do Central Banks Incur Losses?
Central banks are not typical profit-maximizing banks; their losses often stem from policy actions and economic conditions rather than bad business models. A combination of factors can put a central bank’s finances in the red:
- High Interest Costs vs. Low-Yield Assets: Around the world, rising interest rates have squeezed central-bank finances, especially for those that accumulated large bond portfolios during years of low rates. When rates shot up to fight inflation, the value of those bonds fell and central banks had to pay higher interest on liabilities (like commercial-bank reserves), leading to losses. The Bank of Ghana is a case in point: to curb inflation and stabilize the currency, it conducted open-market operations (mopping up excess liquidity) at great expense. In 2024 alone, BoG spent GH¢8.60 billion on interest for these monetary operations, a policy cost that directly contributed to its operating loss.
- Exchange-Rate Movements and Revaluations: Central banks holding foreign exchange reserves or engaged in currency interventions can face exchange-rate losses. If a local currency strengthens after a central bank has amassed foreign assets (or vice versa), the revaluation can produce accounting losses. The BoG experienced about GH¢3.49 billion in revaluation and exchange-rate losses in 2024. Part of this came from Ghana’s own innovative Gold-for-Oil program, where exchange losses on those operations cost the bank GH¢1.82 billion. Likewise, globally in 2022 several central banks saw their foreign reserves plunge in value as the U.S. dollar surged and local currencies weakened, forcing monetary authorities to absorb losses to stabilize their currencies.
- Asset Impairments and Economic Crises: In extreme situations, central banks incur losses by absorbing shocks from the broader economy. Ghana’s 2022 loss is a prime example: the BoG took a huge hit from the government’s Domestic Debt Exchange Programme (DDEP), a restructuring of government bonds during Ghana’s debt crisis. The central bank held a large stock of government securities and loans (e.g., to the Ghana Cocoa Board), which were restructured with haircuts (reductions in value). This impairment of government assets accounted for the bulk of the GH¢60.8 billion loss in 2022. In other words, the central bank sacrificed its balance sheet to help restore national-debt sustainability. Similarly, during economic downturns, central banks might see losses if the value of assets like loans or securities drops due to defaults or credit risks.
- Other Operational Costs: Central banks also have sizeable operating expenses that can contribute to losses, especially when income is under pressure. For instance, the cost of issuing currency (printing new banknotes and coins) and running the bank can be significant. The Bank of Ghana’s currency-issuance cost rose to about GH¢1.01 billion in 2024. In times of economic stress, these routine costs, combined with lower income, mean expenses outrun revenues.
In summary, a central bank can lose money when it is doing things to stabilize the economy: fighting inflation, defending the currency, or backstopping the financial system. These actions often involve a financial trade-off. For the public, it may seem alarming that a central bank is “in the red.” However, these losses are often the flip side of policies that ultimately aim to preserve economic stability.
Does a Central Bank Losing Money Matter?
When a regular commercial bank loses too much money, it can go bust, but a central bank is a very different creature. A central bank cannot go bankrupt in the typical sense, because it has unique powers: it issues the currency. In fact, central banks can and have continued operating effectively even with negative net worth. Historical examples back this up: the central banks of Israel, the Czech Republic, and Chile all successfully ran monetary policy for years despite being technically in negative equity.
For Ghana, this means that even though the BoG’s capital is deeply negative, the bank can still carry out its core functions (like setting interest rates, issuing cedi, and supervising banks) and pursue its mandate of price stability. Losses and even negative equity do not directly impair a central bank’s ability to operate or implement policy. What matters more is whether the central bank can control inflation and support financial stability, objectives that hinge on policy credibility rather than a tidy balance sheet.
However, this doesn’t imply that losses don’t matter at all. If large losses persist year after year, problems can emerge, especially in economies with weaker institutions. One risk is erosion of the central bank’s independence. A central bank that continually loses money might eventually require recapitalization (a financial injection) from the government to shore up its balance sheet. Relying on the government’s purse or, worse, resorting to printing money to cover operating expenses over a long period can undermine the central bank’s autonomy and fuel inflation. Essentially, if a central bank has to beg for funds or print its way out of trouble, the public might lose confidence in its ability to keep prices stable.
There’s also a fiscal implication: when central banks are profitable, they often remit surplus profits to the government’s treasury. In lean years, those remittances dry up, effectively a loss of revenue for the state. For example, several European central banks (like Germany’s Bundesbank and the Netherlands’ central bank) have warned they will halt payouts to their governments in years they incur losses. In Ghana’s case, the BoG’s losses mean the government cannot expect any dividend from the central bank for now – at a time when public finances are already strained.
The good news is that Ghana’s central bank and others in similar positions are taking steps to restore their financial health without derailing their policy goals. Measures include retaining any future profits to rebuild capital, refraining from further monetary financing of government deficits, and streamlining operations to cut costs. Ghana’s 2024 financial report, for instance, reiterates BoG’s commitment to halt direct financing of the budget (under an agreement with the Finance Ministry) and to optimize its income and expenses to eventually return to profitability. These steps are aimed at gradually rebuilding trust and ensuring that the central bank’s balance sheet strengthens over time, while it continues to focus on stabilizing the economy.
Global Examples of Central Bank Losses
Ghana is far from alone in this predicament, recent years have seen several major central banks around the world report significant losses, especially in the aftermath of the COVID-19 pandemic stimulus and the inflation surge that followed. Highlighting a few examples puts the BoG’s situation in perspective and might reassure observers that central bank losses, while unusual, are not unprecedented:
| Central Bank | Reported Loss | Key Drivers | Share of GDP / Equity Impact |
|---|---|---|---|
| Swiss National Bank (SNB) | ≈ CHF 132 bn (≈ US$143 bn) in 2022 | Valuation losses on massive foreign-asset portfolio after market reversal | ~18 % of Swiss GDP; largest central-bank loss on record |
| US Federal Reserve (Fed) | Running multi-year losses since late 2022 | High interest paid on bank reserves versus low-yield bond portfolio | Deferred asset on balance sheet; suspends remittances to U.S. Treasury |
| Reserve Bank of Australia (RBA) | A$37 bn loss in 2022 | Bond-portfolio losses from rapid rate hikes | Wiped out equity, leaving ~-A$12 bn negative capital (-1 % of GDP) |
| Bank of England (BoE) | Projected ~£230 bn cumulative loss over the decade | Quantitative-easing portfolio losses; indemnified by UK Treasury | Transfers flow from Treasury to BoE, reversing years of profits |
| Netherlands Bank (DNB) | Forecast €9 bn cumulative 2023-26 | Rising rates and bond-portfolio losses | No profit remittances to Dutch government for several years |
Other central banks, including those of Germany, Canada, the Czech Republic, and several emerging-market economies, have likewise seen profits evaporate or turn negative since 2022.
Balancing Act Between Stability and Solvency
Central bank losses can be politically charged and worrying to the public, but understanding the why and what next is crucial. In Ghana’s case, the BoG’s losses were largely the cost of stabilizing a sinking ship, after a severe debt and currency crisis, the central bank absorbed losses to help restore confidence in the financial system. The latest figures show improvement, suggesting the worst may be over: losses have “trimmed” significantly and even turned into a small comprehensive gain in 2024. Still, the BoG has a long road ahead to repair its balance sheet and return to full strength.
The broader lesson is that central banks sometimes prioritize economic stability over short-term profits. A temporary loss is often the price of averting a bigger crisis. That said, transparency and prudent management are key to maintaining public trust. Central banks, including Ghana’s, must clearly communicate why losses occurred and how their actions ultimately benefit the economy. Such openness helps the public understand that a loss-making central bank isn’t “failing”, rather, it may be taking necessary steps to secure a healthier financial future for the country.
The BoG’s experience, like that of other central banks with losses, highlights a delicate balancing act: restoring financial solidity on one hand, while safeguarding economic stability on the other. The fact that Ghana’s central bank is inching back from crisis is encouraging, but patience and sound policy will be required to fully mend the bank’s finances. In the meantime, Ghanaians can take comfort knowing that central bank losses, while not ideal, are a manageable part of the journey through economic recovery, a phenomenon seen from Accra to Zurich, and one that central banks worldwide are equipped to handle in the pursuit of their public mandates.Tools
