BoG’s GH¢15.6bn Loss Has Stabilised Inflation, Cedi

The Bank of Ghana (BoG) recorded a net loss of GH¢15.6 billion in 2025, with the central bank stating that the outcome reflects the cost of measures taken to reduce inflation, stabilise the cedi and strengthen the financial system.

According to the Bank’s 2025 financial results, the loss represents a deeper position compared to the GH¢9.4 billion loss recorded in 2024. The Bank attributed the development to what it described as “traceable policy costs” associated with restoring macroeconomic stability after a period of elevated inflation and currency pressures.

The results show that while the Bank’s income grew significantly during the year, the cost of implementing monetary and financial sector policies outweighed those gains, leading to the overall loss position.

BoG reported that total income increased by 137 per cent to GH¢22.3 billion in 2025, with all major income lines recording growth. Despite this improvement, the Bank indicated that the financial outcome was primarily driven by three key cost components—open market operations, the domestic gold purchase programme, and foreign exchange revaluation effects.

Open market operations (OMO), which involve absorbing excess liquidity from the banking system to control inflation, accounted for GH¢16.7 billion in interest costs in 2025. The Bank explained that excess liquidity had built up in the financial system between 2022 and 2024, largely due to high levels of government spending.

To address this, the central bank issued instruments to mop up the excess funds. However, it noted that the process became costly in a high interest rate environment. The Bank also highlighted a “negative carry” effect, where it paid relatively high interest on OMO instruments while earning lower returns on certain restructured assets, contributing to the overall loss.

In addition to liquidity management costs, the Bank reported a net cost of GH¢9.1 billion from its Domestic Gold Purchase Programme (DGPP). The programme, which has been a key component of efforts to build external reserves, involved purchasing gold domestically and holding it as part of the country’s reserve assets.

The Bank indicated that the programme carries structural costs, including pricing differences between market and official rates, transaction-related expenses, and refining and processing losses. It added that the scale of the programme increased significantly in 2025, contributing to the higher cost profile.

Data from the results show that gold purchases rose to 111 tonnes in 2025, compared to lower volumes in previous years. The Bank stated that despite the associated costs, the programme contributed to strengthening Ghana’s external reserves position.

Foreign exchange revaluation effects formed the third major cost component, with a total impact of GH¢29.1 billion recorded through profit and loss and other comprehensive income accounts.

The Bank explained that this was largely driven by the appreciation of the cedi during the year. According to the results, the cedi gained 40.7 per cent against the US dollar in 2025.

While a stronger currency is generally seen as positive for the broader economy, the Bank noted that it reduces the cedi value of foreign-currency-denominated assets held on its balance sheet. As a result, the revaluation led to accounting losses.

The Bank emphasised that these revaluation effects are “paper entries” and do not involve actual cash outflows or a reduction in foreign reserves. It added that similar gains had been recorded in 2024 when the cedi depreciated, increasing the cedi value of foreign assets.

In 2024, the Bank reported combined gains of GH¢12.7 billion from foreign exchange revaluation effects, which supported its financial position at the time. The 2025 outcome, the Bank said, represents a reversal of those earlier gains due to the change in exchange rate movements.

Beyond the net loss, the Bank also reported a net other comprehensive income (OCI) charge of GH¢19.32 billion for 2025, compared to a gain of GH¢12.9 billion in 2024. The reversal was attributed primarily to the appreciation of the cedi.

Cumulative negative equity often described as the central bank’s capital position—widened to GH¢96.3 billion in 2025, up from GH¢61.3 billion the previous year.

Despite this, the Bank maintained that it remains fully operational and capable of carrying out its mandate. It noted that central banks are not profit-maximising institutions and often incur financial costs in the process of achieving policy objectives such as price stability and financial system resilience.

The Bank further indicated that similar trends have been observed in other jurisdictions, where central banks that tightened monetary policy to combat inflation recorded losses or faced financial pressures.

According to the results, the financial outcome reflects the broader context of policy actions taken during the year, which led to significant improvements in key macroeconomic indicators.

Inflation declined sharply over the period, falling from 23.8 per cent in December 2024 to 5.4 per cent by December 2025. The Bank noted that inflation fell consistently throughout the year, marking one of the most sustained disinflation trends in recent years.

The cedi also recorded strong performance, appreciating from around GH¢14.70 to the US dollar to approximately GH¢10.45 by the end of 2025. The Bank stated that the currency’s performance contributed to improved market confidence and reduced imported inflation.

In addition, Ghana’s gross international reserves increased from about US$9.1 billion to US$13.8 billion, representing approximately 5.7 months of import cover. The Bank described this as a record level, supported in part by the gold accumulation programme.

The policy rate was reduced during the year, declining from 28 per cent to 18 per cent, with further adjustments indicated into 2026. Lending rates in the banking sector also declined, reflecting improved monetary conditions.

Public debt levels, measured as a share of gross domestic product, also showed improvement, falling from 61.8 per cent to 45.3 per cent. The Bank noted that the stronger cedi contributed to this outcome by reducing the domestic currency value of external debt.

The Bank said the overall financial results should be viewed within the context of these outcomes, noting that efforts to stabilise the economy often involve trade-offs that are reflected in financial statements.

 

 

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