- Negative Equity Does Not Undermine BoG’s Policy Capacity — Economist Explains
Associate Professor of Economics at the University of Ghana and External Member of the Bank of Ghana’s Monetary Policy Committee (MPC), Prof. Ebo Turkson, has defended the central bank’s recent monetary operations and decisions, arguing that they have strengthened macroeconomic stability even at a significant balance sheet cost.
Speaking during the NorvanReports and Economic Governance Platform (EGP) X Space discussion on the theme “The Price of Stability: Did BoG’s Loss Deliver Real Gains for Ghana’s Economy?”, Prof. Turkson said the Bank of Ghana’s use of open market operations in recent years has largely focused on liquidity absorption to stabilise inflation and anchor expectations.
He explained that the central bank has, in practice, relied on the issuance of bills and bonds to commercial banks to mop up excess liquidity, while remunerating banks for holding those instruments.
“In the last three years, it has been more of taking up liquidity in the system,” he noted, adding that the policy stance has been critical in restoring confidence in the financial system.
According to him, although the measures have resulted in notable costs reflected on the central bank’s books, they have contributed to disinflation, improved confidence, and greater macroeconomic predictability.
“Business confidence and consumer confidence are among the highest as we speak, and it is all because of the stability that has been delivered,” he said.
Prof. Turkson argued that the gains in stability have also been supported by reserve accumulation efforts, including Ghana’s Gold-for-Reserves programme initiated in 2023, which he described as a “game changer” in strengthening external buffers.
He disclosed that Ghana’s reserve position has improved significantly, providing what he described as a cushion against external shocks, including geopolitical tensions.
“We have built enough reserve buffers now to the extent that even with the shocks globally, Ghana is able to withstand,” he said, while cautioning that structural reforms are still necessary to build long-term economic resilience.
He stressed that Ghana’s next phase of economic transformation must focus on reducing import dependence and strengthening value addition.
“That is how we build resilience against external shocks,” he noted.
On the controversial sale of 18 tonnes of gold in October 2025 under the Gold-for-Reserves programme, Prof. Turkson defended the transaction, arguing it was a portfolio management decision aimed at reducing concentration risk.
He explained that at the time, gold accounted for a significant share of reserves, exposing the country to price volatility beyond its control.
“When you have reserves heavily concentrated in gold, whose price you do not control, you need to diversify,” he said.
He further argued that the timing of the sale was justified by market conditions, noting that subsequent global developments, including geopolitical tensions, had altered gold price dynamics.
The economist maintained that proceeds from the sale were retained within the reserve buffer and contributed to strengthening Ghana’s external position, which he said now stands at over 14.5 billion dollars, equivalent to nearly six months of import cover.
He also addressed concerns over the Bank of Ghana’s negative equity position, rejecting arguments that it undermines the central bank’s policy credibility.
“The Central Bank still has its monetary policy tools to fight inflation, stabilise the currency and support growth,” he stated, adding that institutional credibility remained intact.
Prof. Turkson cautioned against politicising the central bank’s operations, describing the Bank of Ghana as one of the country’s most credible institutions whose work should be assessed on technical, and not political, grounds.
He further emphasised that inflation remains a major economic threat, likening it to “an armed robber that attacks everybody at the same time,” and urged continued support for the central bank’s anti-inflation stance.
He concluded that while the stabilisation phase has come at a cost, it has laid the foundation for stronger economic resilience, improved planning horizons for businesses, and long-term structural transformation.
