Despite recording a whopping GH¢9.49 billion in losses in the 2024 financial year, U.S.-based finance professor at Purdue University Northwest, Prof. Pat Obi, believes that the Bank of Ghana (BoG) has made remarkable progress considering its performance from previous years.
While welcoming the signs of recovery, Prof. Obi observes that where the bank performed creditably well are areas that revolve around non-core activities of the BoG, a development he finds to be concerning.
In his reflections on the BoG’s newly released 2024 financial statements, Prof. Obi commended the 28% reduction in operating losses, from GH¢13.23 billion in 2023 to GH¢9.49 billion in 2024.
However, he expressed concern that the GH¢4.02 billion net comprehensive gain reported for the year was not driven by structural improvements in the Bank’s core functions or mandate.
The central bank’s mandate, he explained, primarily lies in maintaining monetary and financial stability, which includes managing inflation, regulating the money supply, and stabilizing the currency through open market operations and other tools.
Yet, the 2024 report suggests continued operational strain in delivering on that mandate.
In a response to The High Street Journal, the finance professor remarked that, “The Bank’s reported net comprehensive gain of GH¢4.02 billion in 2024 was largely the result of non-core activities. These include revaluations of foreign currency holdings, gold, and financial instruments. While this helped improve the Bank’s equity position, it is concerning that the improvement did not come from the Bank’s core business (monetary operations).”
High Cost of Monetary Policy
Prof. Obi indicated that the GH¢8.60 billion cost of open market operations, which is a fundamental tool used by central banks to control inflation, is a signal of the mounting pressure the Bank is under in executing its core duties.
He observes that this cost is significant, especially when compared to the Bank’s negative equity position. It raises questions about the long-term sustainability of these operations.
He also pointed out that exchange rate-related losses amounting to GH¢3.49 billion, partly tied to currency mismatches and valuation losses from initiatives such as the Gold-for-Oil programme, also pose further risks to financial stability and continue to blur the lines between policy tools and fiscal obligations.
Equity Position Still Concerning Despite Gains
Though the Bank’s negative equity position improved slightly, from GH¢65.34 billion in 2023 to GH¢61.32 billion in 2024, Prof. Obi stressed that the improvement came from accounting gains rather than operational efficiencies.
These gains may offer short-term relief, but he believes an equity improvement buoyed by resilient monetary operations, which is the core duty of the Central Bank, is what the bank should aim to achieve.
The Need for Structural Resilience
Prof. Obi emphasized the need for the Bank to consolidate its gains through structural improvements. He is calling for enhanced policy effectiveness, cost control, and transparency, rather than relying on external valuation movements.
He recommended that, “Though the position remains unprofitable, the reduction in losses is noteworthy and suggests a measure of progress. One can only hope, though, that this progress will be sustained due to structural improvements, rather than the fortunes of the forex market and non-core business activities.”
For Prof. Obi, as Ghana continues to navigate a complex economic puzzle, there is a need for the Bank of Ghana to align its financial recovery with its core mission of ensuring price stability, supporting economic growth, and building long-term institutional resilience.
