Development economists have called for lower digital transaction costs and deeper financial inclusion as practical tools to reduce the Bank of Ghana’s (BoG) rising expenses in managing inflation and stabilising the economy.
They argue that encouraging more Ghanaians to keep funds within formal financial systems particularly through banks and mobile money platforms would reduce the Central Bank’s reliance on costly liquidity control measures, such as open market operations.
The economists, Professor Peter Quartey, Acting Director of the Legon Centre for International Affairs and Diplomacy (LECIAD), and Dr Daniel Anim-Prempeh, Chief Economist at the Policy Initiative for Economic Development (PIED), shared these insights in an interview following the BoG’s 2025 financial performance.
The Central Bank recorded an operating loss of GH¢15.63 billion and an additional GH¢19.32 billion loss in Other Comprehensive Income (OCI), underscoring the high financial cost of its inflation control measures and currency stabilisation efforts.
The losses were largely driven by expenses associated with open market operations and the Domestic Gold Purchase Programme.
Additionally, the appreciation of the cedi resulted in valuation losses on foreign reserves, pushing the Bank’s negative equity from GH¢61.32 billion to GH¢96.28 billion.
Prof Quartey explained that a stronger and more inclusive financial ecosystem could significantly reduce the need for such interventions.
“If more people keep their money in banks or digital wallets, the Central Bank will not have to step in as frequently to mop up excess liquidity,” he said.
He noted that funds retained within the financial system could be channelled into long-term investments, including bonds and productive sectors such as manufacturing, ultimately supporting real sector growth.
Prof Quartey observed that digital financial usage has increased, particularly following the removal of the electronic transfer levy (e-levy), with more individuals turning to mobile money and other formal financial channels.
However, he stressed that high transaction costs remain a barrier to wider adoption.
He called for stronger collaboration between government and telecom operators to reduce mobile money charges, arguing that even marginal reductions could have a significant impact on keeping money within the formal financial system.
“Lower charges will encourage more digital transactions and reduce the amount of physical cash in circulation, which the Bank of Ghana must manage,” he said.
Dr Anim-Prempeh also linked the Central Bank’s financial losses to its aggressive inflation-fighting strategies, urging a shift toward more sustainable and less costly approaches.
“Now that some level of macroeconomic stability is being achieved, there is the need to rely more on organic policy tools to manage inflation, rather than incurring high operational costs,” he said.
He warned that excessive spending by the Central Bank to stabilise the economy could undermine public confidence if not carefully managed.
“When people perceive that stability is being artificially maintained through heavy intervention, it can weaken trust in the financial system,” he cautioned.
Dr Anim-Prempeh further emphasised the importance of strengthening Ghana’s productive capacity, particularly in export-oriented industries, to reduce import dependence and ease pressure on the cedi.
According to him, boosting domestic production and exports offers a more sustainable path to currency stability and reduces the burden on monetary policy.
The economists maintained that combining lower digital transaction costs, improved financial inclusion, and stronger real sector performance could help Ghana achieve macroeconomic stability while minimising the financial strain on the Central Bank.
