BoG’s inflation fight and cedi defence driving rising financial losses – CERPA
The Bank of Ghana’s efforts to curb inflation and stabilise the cedi are playing a major role in its growing financial losses, according to a new analysis by the Centre for Economic Research and Policy Analysis (CERPA).
In its latest policy brief, the think tank said the central bank’s reliance on tight monetary policy tools—including high interest rates, open market operations and liquidity management measures—has come at a significant financial cost, which is now reflected in its weakening balance sheet.
“To manage inflation and exchange rate pressures, the Bank of Ghana has relied heavily on open market operations, central bank bills, and high policy rate transmission,” CERPA stated.
The analysis comes amid heightened public concern over the central bank’s financial position, following reports of substantial losses in recent years linked to macroeconomic stabilisation efforts.
CERPA explained that while these policy interventions have helped reduce inflationary pressures and stabilise the exchange rate, they have also increased the cost of monetary operations. The high-interest-rate environment, in particular, has made liquidity sterilisation significantly more expensive.
These operations, used to control money supply and contain inflation, have become costlier as interest rates remain elevated for extended periods.
The think tank also pointed to currency depreciation as another key factor contributing to the losses. It noted that a weaker cedi increases the local currency value of the Bank of Ghana’s foreign liabilities, resulting in exchange rate-related revaluation losses.
“Depreciation of the Ghanaian cedi increases the domestic currency value of foreign liabilities,” the report explained, adding that exchange rate volatility in 2025 likely worsened the central bank’s external position.
CERPA described the situation as a difficult policy balancing act, where efforts to stabilise the economy simultaneously place pressure on the central bank’s finances.
“This trade-off must be managed carefully to avoid undermining confidence in monetary policy,” the report cautioned.
Beyond core monetary operations, CERPA also raised concerns about quasi-fiscal interventions such as the Gold-for-Oil and Gold-for-Reserves programmes. While these initiatives were introduced to help stabilise fuel prices and strengthen reserves, the think tank argued that they extend beyond the central bank’s traditional mandate.
It therefore recommended that government gradually assume responsibility for such non-core functions to reduce pressure on the Bank of Ghana.
CERPA further urged the central bank to refocus strictly on its primary mandate of maintaining price stability, warning that continued involvement in non-traditional operations could further weaken its financial position.
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