The Bank of Ghana (BoG) incurred approximately GH¢17 billion in liquidity sterilisation costs in 2025 as part of its ongoing efforts to stabilise the economy following Ghana’s recent macroeconomic crisis.

Central Bank Governor, Dr. Johnson Pandit Asiama, disclosed the figure while briefing Parliament’s Committee on Economy and Development, describing it as a direct consequence of policy measures aimed at controlling inflation and strengthening monetary policy transmission.

Surge in Sterilisation Costs

The costs primarily stemmed from intensified open market operations (OMO), which the BoG used to absorb excess reserves held by commercial banks. According to Dr. Asiama, scaling up these operations was necessary to address a large liquidity overhang that had weakened the effectiveness of monetary policy.

“When the central bank absorbs excess liquidity from the banking system, it pays interest on the instruments used to temporarily hold those funds,” Dr. Asiama explained. “As policy interest rates remained elevated during the stabilisation period, the cost of these liquidity management operations naturally increased.”

Sterilisation expenses declined slightly from GH¢18.14 billion in 2024 to roughly GH¢17 billion in 2025, reflecting the expanded scale of liquidity management operations under tight monetary policy.

Before the recent macroeconomic crisis, sterilisation played a relatively modest role in liquidity management. The BoG absorbed about GH¢5.66 billion in 2020 and GH¢5.65 billion in 2021, when liquidity conditions were more stable. Pressures began increasing in 2022, with sterilisation rising to GH¢7.73 billion as inflation, exchange rate depreciation, and growing government financing needs intensified.

The peak came in 2023 when the BoG withdrew roughly GH¢24.8 billion through OMOs, coinciding with the sovereign debt restructuring and the Domestic Debt Exchange Programme (DDEP), which created distortions in liquidity across the banking sector.

By 2024, sterilisation volumes moderated to GH¢18.14 billion, and the GH¢17 billion reported for 2025 suggests a gradual easing, though the level remains well above pre-crisis ranges of GH¢5–7 billion.

Measures to Restore Monetary Policy Effectiveness

The high level of sterilisation reflects structural excess liquidity in the banking system, which had weakened the transmission of the policy rate into market interest rates, limited deposit competition, and kept lending rates elevated. To address this, the BoG increased the frequency and volume of OMOs and sterilised inflows from foreign exchange interventions to prevent liquidity from re-entering the system. The central bank also coordinated closely with the Ministry of Finance on government cash management to minimise unintended liquidity injections.

Broader Context

When Dr. Asiama assumed office in February 2025, Ghana was emerging from one of its most challenging economic periods, marked by a sovereign debt restructuring, sharp currency depreciation, and surging inflation. Headline inflation had ended 2024 at 23.8 percent—well above the BoG’s target band of 8 ± 2 percent—while the cedi had depreciated 24.8 percent. The financial system was adjusting to debt restructuring impacts, which strained bank balance sheets and constrained lending activity.

The BoG itself faced financial pressures, including a 50 percent haircut on government securities holdings, valuation losses on foreign currency assets, and operational costs associated with the Domestic Gold Purchase Programme.

Despite these pressures, Dr. Asiama emphasised that the financial costs of sterilisation reflect policy measures necessary to restore stability. “The financial effects that will be reflected in the Bank’s accounts are the accounting counterpart of stabilisation benefits now being realised across the Ghanaian economy,” he said.

Signs of Recovery

Recent macroeconomic data suggest the stabilisation programme is yielding results. Headline inflation fell sharply from 23.8 percent in December 2024 to 5.4 percent by December 2025, and further to 3.3 percent in February 2026. The cedi strengthened, gross international reserves rose to US$13.8 billion (around 5.7 months of import cover), and the Monetary Policy Committee reduced its policy rate by 900 basis points to 18 percent by the end of 2025, easing borrowing conditions.

Outlook

Looking ahead, the BoG expects liquidity management costs to decline as macroeconomic conditions stabilise. “As inflation declines and policy interest rates gradually normalise, the interest expense associated with absorbing excess liquidity in the banking system will also decline naturally,” Dr. Asiama said.

Nevertheless, the Bank of Ghana will continue to adopt a cautious and data-driven approach to monetary policy, monitoring risks from global financial conditions and commodity price volatility while consolidating gains achieved during the stabilisation period.