- BoG Financials Show Costly but Effective Inflation Fight as Cedi, Reserves and Credit Conditions Improve
There are moments in economic management when a country must decide whether it prefers the comfort of a clean balance sheet or the harder discipline of a stable economy. Ghana faced that choice in 2025. The Bank of Ghana’s audited financial statements show a loss of GH¢15.6 billion, a figure large enough to trigger political criticism, public anxiety and understandable questions about how the central bank is being managed. But a serious reading of the numbers demands more than outrage. It requires context.
The Bank of Ghana did not record a loss in a vacuum. It recorded that loss in a year when inflation fell from 23.8 percent at the end of 2024 to 5.4 percent by the end of 2025; when the cedi reversed a punishing period of depreciation and appreciated by more than 40 percent; when gross international reserves rose from US$9.1 billion to US$13.8 billion by year-end; when lending rates began to ease; and when private-sector credit conditions started to improve after years of compression. The question, therefore, is not merely whether the Bank made a loss. It is whether Ghana bought something valuable with that loss.
The answer, uncomfortable as it may be for those who prefer simple narratives, is yes.
The Bank of Ghana’s primary mandate under Section 3 of the Bank of Ghana Act, 2002, Act 612, as amended, is to maintain stability in the general level of prices. It is not established to maximise profit like a commercial bank. It is not a dividend-seeking institution. Its legitimacy rests on price stability, monetary credibility, financial stability and confidence in the currency. In policy terms, the Bank’s medium-term inflation target is 8 percent, plus or minus 2 percentage points. By the end of 2025, inflation had fallen below that band. That is not a minor achievement in a country that, barely three years earlier, had seen inflation peak above 50 percent and confidence in the currency collapse.
This is the essential point that must not be lost in the public debate. A central bank’s accounts tell only part of the story. They show the cost of the policy tools deployed. They do not fully capture the social and economic costs avoided: the erosion of wages, the collapse of business planning, the rise in poverty through inflation, the destruction of savings, the crowding out of private credit and the loss of investor confidence.
In 2024, Ghana’s economy was still fragile. Inflation stood at 23.8 percent. The cedi had depreciated sharply. Lending rates were above 30 percent. The fiscal deficit was elevated, public debt remained heavy, and private-sector credit was recovering only slowly. Businesses were not expanding; many were simply trying to survive. Importers could not price with confidence. Manufacturers could not forecast input costs. Households could not plan expenditure. Workers were seeing nominal wage gains swallowed by inflation. The economy was stabilising, but confidence had not returned.
By 2025, the macroeconomic picture had changed materially. Inflation dropped to 5.4 percent by December. Gross reserves rose to US$13.8 billion. The cedi strengthened significantly and was described in the independent assessment as one of the strongest-performing currencies of the year. Lending rates declined from an average of 30.25 percent in December 2024 to 20.45 percent by December 2025. Public debt fell to 45.3 percent of GDP from 61.8 percent, the fiscal deficit narrowed to 1.0 percent of GDP from 7.9 percent, and the current account balance improved sharply.
These are not cosmetic improvements. They are the foundations of economic normalisation.
The Bank’s critics are right about one thing: GH¢15.6 billion is a serious loss. It must be scrutinised. No public institution should be shielded from accountability because it claims a difficult mandate. But scrutiny must be analytical, not theatrical. The Bank’s audited financials show that the largest cost driver was open market operations. The Bank spent GH¢16.7 billion on these operations in 2025, compared with GH¢8.6 billion in 2024. Open market operations are used to absorb excess liquidity from the economy. When there is too much money chasing too few goods, inflation rises. The central bank issues instruments to mop up liquidity, and because those instruments carry interest, the Bank incurs a cost.
That cost was the price of disinflation.
It is tempting to ask whether the Bank could have spent less. Every serious economist should ask that question. But it is equally important to ask what would have happened had the Bank not acted forcefully. Would inflation have fallen as quickly? Would the cedi have stabilised? Would lending rates have declined? Would private-sector credit have recovered? Would confidence have returned?
The independent assessment of the Bank’s 2025 financial results puts the trade-off plainly: the same tools that drove disinflation also increased short-term policy costs. Inflation fell from 23.8 percent in December 2024 to 18.4 percent in March 2025, 13.1 percent in June, 8.4 percent in September and 5.4 percent in December. That is a 77 percent reduction in 12 months. Such a decline does not happen without policy pressure.
This is why the public conversation must move beyond the phrase “Bank of Ghana loss” and toward the more useful question: what is the cost of restoring stability after a crisis?
Every crisis has a bill. Sometimes the bill appears in the budget. Sometimes it appears in the exchange rate. Sometimes it appears in household poverty. Sometimes it appears in unemployment. In 2025, part of Ghana’s stabilisation bill appeared in the central bank’s accounts. That does not make it painless. But it does make it intelligible.
The private sector understands this more clearly than many political commentators. Seth Twum-Akwaboah, Chief Executive of the Association of Ghana Industries, recently offered a blunt assessment of Ghana’s macro stabilisation drive. He said the strengthening and relative stability of the cedi was necessary, even if costly, because the economy had been rattled by uncertainty and collapsing confidence.
“We were in crisis, the confidence level was so low, people investing their own resources became an issue. There was so much uncertainty in the system that it required that level of stability,” Mr Twum-Akwaboah said on Channel One TV’s Quarterly Economic Outlook programme.
That statement should frame the debate. For businesses, stability is not an abstract macroeconomic slogan. It is the difference between importing raw materials and suspending orders. It is the difference between pricing goods and guessing exchange rates. It is the difference between taking a bank loan and postponing expansion. It is the difference between hiring workers and freezing operations.
When inflation is above 20 percent and lending rates are above 30 percent, a business borrowing GH¢100,000 can pay more than GH¢30,000 a year in interest alone. That excludes rent, wages, utilities, taxes, transport, raw materials and exchange-rate losses. At that point, credit is not a tool for growth; it becomes a burden. When lending rates fall toward 20 percent and real private-sector credit begins to grow, the business environment changes. Firms can begin to plan. Banks can begin to lend. Investment can begin to recover.
That is why lower inflation is not simply cheaper bread, although that matters. Lower inflation is cheaper credit. It is lower government borrowing costs. It is more predictable contracts. It is stronger purchasing power. It is improved business confidence. It is the revival of planning horizons. A country cannot industrialise on unstable prices. No manufacturer can sign long-term supply contracts when input prices change violently. No investor can commit capital when the currency’s direction is unpredictable. No household can save meaningfully when inflation destroys the value of money.
The Bank of Ghana’s 2025 loss must therefore be judged against the economic conditions it helped create.
The second major issue in the accounts is the Domestic Gold Purchase Programme. Critics have focused on the gold-related losses and accounting pressures. Again, scrutiny is legitimate. Ghana’s gold resources must be managed with transparency, discipline and accountability. But the reserve numbers complicate the accusation that the programme was simply a failure.
Ghana’s foreign reserves stood at US$9.1 billion at the end of 2024. By the end of 2025, they had increased to US$13.8 billion. Independent analysis indicates that reserves later rose to about US$14.5 billion, the highest level in the country’s history. If the gold programme were fundamentally destroying value or depleting national assets, the reserve position would be deteriorating. Instead, it improved substantially.
The Bank’s own financial statements say the Domestic Gold Purchase Programme contributed meaningfully to the stabilisation of the foreign exchange market by strengthening reserve buffers, reducing structural pressure on foreign currency demand and supporting confidence in the Bank’s external position. Through domestic gold acquisition, the Bank was able to augment reserves without relying entirely on the domestic foreign exchange market.
That matters. In a country where exchange-rate instability quickly feeds into fuel prices, transport costs, food inflation and business uncertainty, reserve adequacy is not a technical luxury. It is economic insurance.
The gold programme, however, created accounting pressures. Gold purchased locally was priced using commercial market exchange rates but recorded in the Bank’s books at the official or Bank of Ghana reference rate. The gap between those rates created an accounting loss at the point of purchase. Additional costs came from offtake discounts, assaying, refining and transaction-related expenses. Some of these are real commercial costs; others are accounting effects. The distinction is important because the public deserves clarity, not confusion.
The better critique is not that the programme produced no benefit. It clearly contributed to reserve accumulation. The better critique is whether the cost structure was optimal, whether the pricing framework was efficient, whether intermediaries captured excessive margins, and whether the transition to improved frameworks such as GANRAP will reduce future costs. That is where Parliament, civil society, the media and analysts should focus.
A third major driver of the Bank’s financial position was exchange-rate revaluation. The cedi’s strong appreciation in 2025 helped Ghana. It reduced imported inflation. It lowered the cedi cost of raw materials and imported goods. It eased pressure on fuel-linked costs. It improved sentiment. But it also reduced the cedi value of the Bank’s foreign-currency assets when translated into local currency.
This is perhaps the most misunderstood part of the debate. If the Bank holds dollar assets and the cedi strengthens, the same dollar assets are worth fewer cedis on paper. The dollars have not disappeared. The reserves have not been stolen. The underlying assets remain. The accounting translation changes because the currency has moved.
Independent analysis gives a simple example: if one holds US$1,000 and the exchange rate is GH¢14.70 to the dollar, the cedi value is GH¢14,700. If the exchange rate moves to GH¢10.45, the same US$1,000 is now worth GH¢10,450 in accounting terms. The holder still has US$1,000. The cedi value has changed because the cedi strengthened. That is what happened to portions of the Bank’s reserve assets.
This is the paradox of currency recovery. The same stronger cedi that consumers and businesses welcome can create accounting losses for the central bank. We cannot celebrate cedi appreciation in the market and then treat its accounting effect on the central bank’s books as evidence of mismanagement.
In 2024, when the cedi weakened, foreign assets were worth more in cedi terms, creating gains. In 2025, when the cedi strengthened, the reverse happened. Same mechanism. Different direction. The conclusion should not be that a strong cedi is bad. The conclusion should be that central bank accounts must be interpreted with an understanding of exchange-rate translation effects.
The global experience confirms this. Central banks that fight inflation often incur losses. The European Central Bank reported a loss of 7.9 billion euros in 2024 while bringing inflation under control. The Swiss National Bank reported a loss of 132 billion Swiss francs in 2022. These institutions were not declared bankrupt. Their losses reflected monetary policy costs, valuation effects and market movements. Ghana is not an outlier simply because its central bank recorded a loss while executing a stabilisation mandate.
The comparison is not meant to excuse weak governance. It is meant to correct poor analysis. A central bank’s loss is not automatically evidence of waste. The nature of the loss matters. The policy context matters. The macroeconomic outcome matters. The financing structure matters. The credibility of the institution matters. The audit opinion matters.
On that point, the Bank of Ghana’s 2025 financial statements were independently audited by KPMG. The auditors issued an opinion that the statements were prepared, in all material respects, in accordance with the basis of accounting described in the notes. The auditors also drew attention to the Bank’s basis of accounting, especially the statutory treatment of gold, SDRs and foreign securities under the Bank of Ghana Act, but did not modify their opinion.
This does not end the debate. It should raise the quality of the debate.
There remains a serious issue of negative equity. The Bank and its subsidiaries recorded negative equity of GH¢93.82 billion at the end of 2025, compared with GH¢58.62 billion in 2024. For the Bank alone, negative equity stood at GH¢96.28 billion. That is not a trivial matter. It reflects the cumulative effect of the Domestic Debt Exchange Programme, foregone income on government securities, monetary policy costs, gold-related accounting effects and exchange-rate revaluation.
But negative equity at a central bank is not the same as bankruptcy in a commercial bank. A commercial bank with negative equity faces solvency problems because it depends on depositor confidence, capital adequacy and its ability to meet obligations through private balance-sheet strength. A central bank is different. It issues currency. It operates under statutory authority. It conducts monetary policy. It can function with negative equity if it retains credibility, policy effectiveness and the backing of the sovereign.
That is why the Bank’s concept of policy solvency is important. The 2025 financial statements define policy solvency as the capacity of a central bank to finance the full cost of its monetary policy operations from internally generated income, without resorting to monetary financing or extraordinary government support. On this measure, the Bank reported a positive policy solvency position in 2025. Income from operations was GH¢22.23 billion, while the cost of open market operations was GH¢16.73 billion, leaving a positive balance of GH¢5.50 billion. That was a marked improvement from GH¢793.5 million in 2024.
This is a crucial distinction. The Bank made an accounting loss, but its core operational income exceeded the cost of its main monetary policy operation. That does not erase the loss. But it shows the institution is not incapable of functioning.
The Bank’s financial statements also disclose a recapitalisation path. Government has acknowledged its obligation to restore the Bank’s capital base, with a phased recapitalisation programme expected between 2026 and 2032. The objective is to restore equity to a level consistent with the Bank’s risk profile and operational mandate.
That commitment must be taken seriously. A central bank can operate with negative equity, but it should not be left indefinitely exposed. Recapitalisation is important for credibility, institutional independence and long-term balance-sheet resilience. Government must honour the commitment without undermining fiscal consolidation. That will require discipline, transparency and a credible medium-term fiscal path.
The danger now is complacency. Stabilisation is not the same as transformation. Lower inflation is not yet a lower cost of living for everyone. A stronger cedi is not yet industrial competitiveness. Improved reserves are not yet export diversification. Lower policy rates do not automatically translate into affordable credit for small businesses. The gains are real, but they are not self-sustaining.
This is where Ghana has failed before. We stabilise, celebrate, relax, overspend, politicise policy, weaken buffers, and return to crisis. The lesson from 2025 should not be that costly stabilisation is always acceptable. The lesson should be that instability is even more expensive and that the gains of stabilisation must be protected through fiscal discipline, transparent central banking, better public communication and structural reform.
The Bank of Ghana must also improve how it explains its financial statements. Central banking is technical, but public confidence is political. If citizens do not understand why losses arise, bad-faith narratives will fill the gap. The Bank must explain open market operations in plain language. It must explain revaluation losses. It must explain the gold programme. It must explain policy solvency. It must publish, engage and educate. Monetary credibility depends not only on what central banks do but also on whether the public understands why they do it.
The media also has a responsibility. We must interrogate the numbers, not sensationalise them. We must ask hard questions about cost efficiency, governance, recapitalisation, gold pricing and policy coordination. But we must also resist the temptation to reduce central banking to a profit-and-loss headline. If a central bank loses money while restoring price stability, the proper question is not “why did it lose money?” The proper question is “were the costs necessary, efficient, transparent and justified by the outcomes?”
For 2025, the evidence suggests that the Bank of Ghana’s loss was costly but effective.
Inflation fell dramatically. The cedi strengthened. Reserves improved. Lending rates declined. Real credit conditions began to recover. Business confidence improved. The private sector regained some ability to plan. Households saw the beginnings of price relief. Ghana’s external buffers were rebuilt. These are not abstract gains. They are the conditions without which economic recovery cannot proceed.
Still, Ghana should not romanticise the loss. A GH¢15.6 billion loss is not a medal. It is a bill. The fact that the bill bought stability does not mean it should be repeated casually. The task now is to reduce the cost of maintaining stability. As inflation remains low and policy rates decline, open market operation costs should fall. As the gold programme is reformed, transaction-related pressures should reduce. As the exchange rate stabilises, revaluation volatility should moderate. As the government recapitalises the Bank, the equity position should gradually improve.
The ultimate test will be whether Ghana can convert stabilisation into growth that people feel: lower lending rates for businesses, more credit to productive sectors, stronger local manufacturing, stable food prices, job creation, fiscal discipline, and reduced vulnerability to external shocks.
The Bank of Ghana’s 2025 financials therefore tell a more complex story than either its critics or defenders may prefer. They show a central bank carrying the cost of a difficult macroeconomic repair. They show a balance sheet weakened by policy choices, debt restructuring and valuation effects. But they also show an economy that gained from those choices: lower inflation, stronger reserves, a firmer cedi and improved credit conditions.
The price of stability was high. But the price of returning to the 2024 economy would be higher.
Ghanaians should demand accountability for every cedi spent. But they should also recognise that in central banking, the cheapest-looking option is often the most expensive one. Not fighting inflation would have preserved the Bank’s accounts in the short term while destroying household incomes, business confidence and the currency. The Bank chose the harder path: absorb the cost, restore stability, and rebuild credibility.
The next challenge is to make sure Ghana does not waste the stability it has paid so dearly to regain.
NorvanReports | By Norvan Acquah-Hayford
