The Bank of Ghana’s (BoG) 2025 financial results tell a story that is easy to misunderstand at first glance, as revenues surged strongly, yet the Bank still recorded significant losses in its audited financial statement.
The reason lies not in routine operations, but in the cost of executing three major policy interventions. These major activities were fighting inflation, stabilising the cedi, and building reserves through the domestic gold purchasing programme.
Put simply, the Bank spent heavily to fix the economy, and those costs showed up as losses on its books.
Inflation Fight: The High Cost of “Mopping Up” Money
To bring inflation down, the Bank of Ghana relied heavily on Open Market Operations (OMO), which is a standard central banking tool used to reduce excess money in circulation.
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Here’s how it works in practice:
During the period between 2022 and 2024, large government spending pumped significant liquidity into the banking system. Too much money chasing too few goods pushed inflation higher.
To reverse this, the central bank stepped in to “absorb” the excess cash. It did this by issuing short-term instruments (OMO bills). This means it was effectively borrowing money (the excess money) from banks and paying them interest.
That’s where the cost comes in. In 2025, interest rates on these OMO bills were high meaning the Bank had to pay very high interest to attract funds from commercial banks. At the same time, much of its existing assets, especially restructured government securities, were yielding relatively low returns.
This mismatch created what economists call a negative carry, which means the Bank was paying more on what it borrowed than it was earning on what it owned.
The result? A massive GH¢16.7 billion cost tied directly to the inflation fight.
It is, however, significant that the outcome of this exercise is glaring. Inflation dropped sharply over the year. But the financial cost of achieving that stability was substantial.
Cedi Stability: When a Stronger Currency Creates Losses
Another major source of losses came from efforts to stabilise the cedi. In periods of volatility, the Bank of Ghana often intervenes in the foreign exchange market or holds large foreign reserves to support the currency.
But there is a less obvious accounting effect that comes with currency movements. When the cedi strengthens, the local currency value of foreign assets (like dollar reserves) declines.
Think of it this way; if the Bank holds $1 billion and the exchange rate falls, that same $1 billion is now worth fewer cedis when converted. On paper, that becomes a loss, even though the dollar amount hasn’t changed.
In 2025, as the cedi stabilised and strengthened, this FX revaluation effect led to a significant accounting loss of about GH¢29.1 billion.
This is not a cash loss in the traditional sense, but it still reduces the Bank’s reported income and equity position.
In essence, part of the “cost” of a stronger cedi is that the central bank’s foreign assets appear less valuable in local currency terms.
Gold for Reserves: The Cost of Building Buffers
The Domestic Gold Purchasing Programme (DGPP), often referred to as the Gold for Reserves initiative, was designed to boost Ghana’s reserves and reduce reliance on foreign currency borrowing.
The idea is to buy gold locally (often in cedis), refine or export it, and convert it into foreign exchange or reserve assets.
But execution is complex and costly. The Bank incurred around GH¢9.1 billion in net costs linked to this programme. These costs stem from several practical challenges:
Pricing pressures: Gold must be bought at competitive prices to prevent smuggling, limiting profit margins.
Transaction and logistics costs: Refining, transporting, and trading gold all come with expenses.
Timing risks: Delays between purchase and sale can expose the Bank to price fluctuations.
Market dynamics: Selling gold at the right time and price is not always guaranteed.
In short, while the programme helps build reserves and supports the cedi, it does not come without financial trade-offs.
The Bigger Picture: Policy Success, Financial Cost
Across all three areas, a clear pattern emerges:
Fighting inflation required paying high interest → OMO losses
Strengthening the cedi reduced the value of reserves → FX losses
Building reserves through gold involved operational and pricing costs → DGPP losses
As the BoG maintains, together, these are policy-driven losses, not necessarily signs of mismanagement. They reflect the real cost of stabilising an economy under stress.
