As Ghana prepares for its mid-year budget review in July, attention is increasingly turning to the transparency and accountability surrounding plans to recapitalise the Bank of Ghana (BoG), with policymakers and analysts calling for greater public scrutiny.
While there is broad agreement that the central bank requires financial restructuring, the real debate is now centred on how the process will be funded, managed, and communicated to Ghanaians.
Recent financial disclosures show the BoG’s negative equity position has deepened significantly, raising concerns about the long-term fiscal implications and the potential burden on taxpayers.
The issue stems largely from the impact of the government’s Domestic Debt Exchange Programme (DDEP), which significantly reduced the value of assets held by the central bank.
As a major holder of government bonds, the BoG exchanged high-yield securities for instruments with lower returns and longer maturities, weakening its balance sheet.
Additional pressures came from financial support extended to government during the COVID-19 period, further compounding the central bank’s losses.
Although central banks can technically operate with negative equity, experts warn that such a position may affect institutional credibility and weaken confidence in monetary policy, especially when the regulator itself appears financially constrained.
The Bank of Ghana has, however, maintained that its situation reflects the accounting outcome of policy decisions rather than operational distress.
It insists that its ability to conduct monetary policy and maintain financial stability remains intact.
At the policy level, discussions between the BoG and the Ministry of Finance are advancing towards a structured recapitalisation plan.
The proposed approach involves phased capital injections using non-tradable, zero-coupon bonds, designed to avoid additional interest costs.
A Memorandum of Understanding signed in January 2025 outlines how government intends to support the central bank in reversing its negative equity position.
Despite these steps, some lawmakers are demanding greater openness in the process. Abena Osei-Asare, Member of Parliament for Atewa East, has called for full disclosure of the recapitalisation strategy, including its cost and implications for the national budget.
She argued that any use of public funds must be subjected to parliamentary approval and clearly explained to citizens, warning that the burden could ultimately fall on taxpayers through higher debt or fiscal adjustments.
Similarly, Mohammed Amin Adam has raised concerns about the broader macroeconomic risks, urging the International Monetary Fund to closely monitor developments as Ghana exits its Extended Credit Facility programme.
He cautioned that the central bank’s financial position could have “material implications” for the country’s fiscal outlook if not carefully managed.
On the other hand, Isaac Adongo, Member of Parliament for Bolgatanga Central, described the recapitalisation as a “deferred fiscal cost,” stressing that it would inevitably have budgetary consequences, even if implemented gradually.
He criticised the previous administration for failing to initiate a recapitalisation plan before leaving office, thereby passing the challenge to the current government.
Beyond Ghana, analysts note that recapitalisation is not uncommon in central banking. Institutions such as the Bank of England and central banks in Chile and the Philippines have undertaken similar exercises to restore balance sheets and maintain credibility.
However, the Ghanaian case stands out due to its scale and the fiscal pressures already facing the economy.
As the mid-year budget approaches, the focus is shifting from whether the Bank of Ghana should be recapitalised to how the process can be carried out transparently without undermining fiscal stability.
For many observers, the key question remains: how to restore confidence in the central bank while safeguarding public finances in an already constrained economic environment.
