The debate surrounding the Bank of Ghana’s reported GH¢15.6 billion loss for 2025 has quickly become one of the most politically charged discussions in Ghana today. Critics have portrayed the losses as evidence of policy failure or institutional weakness. Yet, a closer reading of the Bank’s 2025 Financial Statements and macroeconomic outcomes suggests a more nuanced reality: the losses were largely the consequence of deliberate stabilisation policies that helped restore confidence in Ghana’s economy after years of severe turbulence.
Central banks are not commercial institutions whose primary objective is to maximise profits. Their core responsibility is macroeconomic stability, preserving currency value, controlling inflation, safeguarding reserves, and finally maintaining financial-system confidence. In many global instances, these objectives come with substantial operational costs.
The Ghanaian experience in 2025 appears to fit squarely within this global pattern. According to the Bank of Ghana’s 2025 Financial Statements, the Bank’s loss position was driven principally by three factors:
(1) the cost of open market operations (OMO), (2) revaluation and (3) exchange-rate losses and losses associated with gold reserve transactions. Yet, these losses coincided with one of the strongest macroeconomic turnarounds Ghana has recorded in recent years.
The Macroeconomic Payoff
By the end of 2025, Ghana’s economic indicators had improved dramatically for the positive:
- Inflation reportedly declined sharply from 23.8% in 2024 to 5.4% in 2025.
- The cedi appreciated significantly against the US dollar.
- Gross international reserves increased from US$9.1 billion to US$13.8 billion.
- Import cover rose to approximately 5.7 months.
- Public debt-to-GDP fell substantially.
- The policy rate and commercial lending rates both declined materially, easing financing conditions for businesses and households.
These gains did not emerge spontaneously. They were the product of a tight and often costly monetary policy framework. Indeed, Reuters reported in late 2025 that Ghana’s inflation had fallen from a peak of 54% in January 2023 to single digits by October 2025, allowing the central bank to embark on a cycle of monetary easing after an extended period of aggressive tightening. The Bank of Ghana’s interventions, therefore, appear less like financial mismanagement and more like the fiscal cost of restoring macroeconomic credibility.
Open Market Operations: The Hidden Cost of Fighting Inflation
The largest contributor to the 2025 losses was the cost of Open Market Operations. The Bank’s financial statements indicate that OMO costs rose from approximately GH¢8.6 billion in 2024 to GH¢16.7 billion in 2025. This was not accidental. To reduce inflation, the central bank had to sterilise excess liquidity by issuing instruments to absorb money from circulation. Such operations inevitably create interest expenses because the central bank pays commercial banks and financial institutions to hold these sterilisation instruments. In essence, the Bank of Ghana paid a financial price to reduce inflationary pressure. This phenomenon is not unique to Ghana. The European Central Bank reported historic losses after years of tightening monetary policy and paying elevated interest on reserves following the post-pandemic inflation shock.
Similarly, the Bank of England incurred major losses linked to quantitative tightening operations. The Federal Reserve System also recorded significant deferred asset losses as interest costs rose faster than earnings on its bond portfolio. Across the world, central banks have increasingly accepted temporary losses as the cost of restoring price stability.
The same logic applies to Ghana. Had the Bank maintained its 2024 intervention levels instead of intensifying monetary tightening, inflationary pressures could have persisted longer, potentially weakening the cedi further and prolonging macroeconomic instability.
The Currency Appreciation Paradox
One of the less understood aspects of the Bank’s losses relates to exchange-rate revaluation. Ironically, the stronger performance of the cedi in 2025 contributed to accounting losses on foreign-currency holdings. When a domestic currency appreciates sharply, the local currency value of foreign reserve assets declines. Thus, although Ghana’s reserve position improved in dollar terms, the accounting conversion into cedis generated revaluation losses.
The Bank reported that revaluation and exchange-rate differences rose significantly compared to 2024. This dynamic is common among central banks operating large foreign reserve portfolios. The distinction between realised and unrealised losses, therefore, becomes critical.
The controversy surrounding claims of a “GH¢44 billion loss” stems partly from attempts to include unrealised valuation adjustments on foreign securities, IMF Special Drawing Rights (SDRs), and gold holdings as part of operational losses. Under international accounting treatment and the Bank of Ghana Act, these items are treated separately because they are not losses arising from the Bank’s core policy operations.
In central banking practice globally, unrealised valuation swings are often excluded from assessments of operational solvency because they fluctuate with exchange-rate and commodity-price movements.
Gold Reserves: Strategic Buffer or Trading Risk?
Another significant source of losses arose from the Bank’s gold operations. The Bank’s Gold-for-Reserves programme represented a strategic shift in reserve management. Rather than relying exclusively on traditional reserve currencies, Ghana increasingly accumulated gold as part of reserve diversification. This policy reflected a broader trend among African and emerging-market central banks.
The Central Bank of Nigeria, the South African Reserve Bank, and the Bank of Tanzania have all explored greater gold reserve accumulation in recent years amid rising concerns about dollar volatility, geopolitical fragmentation, and inflation risks.
Globally, central banks collectively purchased record quantities of gold between 2022 and 2025. Institutions such as the People’s Bank of China and the Reserve Bank of India aggressively expanded gold holdings as part of reserve diversification strategies.
For Ghana, gold reserves carried both symbolic and strategic significance, particularly given the country’s position as Africa’s leading gold producer. However, gold reserve accumulation carries market risk. The Bank’s statements show that losses arose partly because gold prices weakened during certain trading windows between acquisition and disposal, while operational costs associated with the transactions also increased. In highly volatile commodity markets, timing mismatches can generate temporary accounting losses even when the long-term reserve strategy remains sound.
Importantly, reserve diversification is not typically evaluated on a single year’s profit-and-loss outcome. Central banks assess such programmes over multi-year horizons based on reserve adequacy, currency stability, and resilience against external shocks. This is where there is room for improvement on the part of the Central Bank. Cognisance should also be given to the prudent efforts thus far by the BoG.
Comparing 2023, 2024 and 2025
The broader trajectory of the Bank of Ghana’s finances also matters. In 2022 and 2023, Ghana experienced one of the most severe macroeconomic crises in its recent history, characterised by soaring inflation, debt restructuring, cedi depreciation, and fiscal instability.
The Bank’s balance sheet absorbed major shocks linked to the Domestic Debt Exchange Programme (DDEP), exchange-rate pressures, and emergency stabilisation measures. By 2024, losses had moderated compared with the extreme stress of the crisis period, although the Bank still recorded negative equity. The 2025 losses, therefore, occurred against a backdrop of macroeconomic recovery rather than collapse.
More significantly, the Bank’s operational revenues reportedly grew strongly in 2025, with major income lines improving substantially. The deterioration in net income was therefore not due to weak revenue generation but rather the extraordinary cost of policy interventions and valuation adjustments, making the distinction crucial.
As conventional finance and economics practice will have it, a central bank can be operationally effective while simultaneously posting accounting losses. Indeed, many of the world’s most credible central banks have operated for extended periods with negative equity or temporary losses without impairing policy effectiveness. This is not, however, the case in instances of economic mismanagement.
Policy Solvency versus Commercial Profitability
According to local Ghanaian press, the Bank of Ghana has argued that it remains “policy solvent” despite its losses. This concept is fundamental to understanding central banking. Unlike commercial banks, central banks possess unique balance-sheet structures and policy functions. Their credibility depends less on annual profitability and more on their capacity to anchor inflation expectations, stabilise markets, and maintain confidence in the currency.
The relevant question, therefore, is not whether the Bank made a profit in 2025. The more important question is whether Ghana’s economy became more stable because of the Bank’s interventions. The evidence suggests that it did. Inflation declined sharply. The cedi stabilised. Foreign reserves improved. Lending rates eased. Investor confidence strengthened. Those outcomes did not emerge without cost.
The African Central Banking Dilemma
Ghana’s experience reflects a broader African dilemma. Many African central banks are simultaneously managing inflation, exchange-rate volatility, debt stress, commodity shocks, and external financing constraints. In this environment, reserve accumulation, liquidity sterilisation, and exchange-rate interventions often create large accounting distortions.
Yet failing to intervene can prove even more costly. Countries that delayed stabilisation efforts during periods of inflationary pressure often experienced deeper currency crises, capital flight, and prolonged economic instability. The challenge for African central banks, therefore, lies in balancing transparency, operational credibility, and public communication while implementing expensive but necessary stabilisation policies. What the current BoG leadership appears to have demonstrated effectively.
Conclusion
The Bank of Ghana’s 2025 losses should not be viewed merely through the narrow lens of commercial profitability. It represents the financial cost of a broader stabilisation programme aimed at restoring macroeconomic order after one of Ghana’s most difficult economic periods in decades. Criticism of central bank losses is legitimate in any democracy. Accountability matters. Transparency matters even more. However, it is equally important to distinguish between operational failure and policy costs incurred in pursuit of national economic stability.
In 2025, the Bank of Ghana appears to have chosen stabilisation over short-term profitability. History may ultimately judge that decision not by the size of the accounting loss, but by whether the macroeconomic recovery it helped engineer proves durable and sustainable.
By: Sharif Mahamud Khalid, Associate Professor of Accounting & Finance; and Economic Advisor to the Vice President
DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
Source: www.myjoyonline.com
