We incurred GH¢8.3bn cost on open market operations; reducing inflation by 30% – BoG

  Mon, 10 Jun 2024
Business & Finance We incurred GH¢8.3bn cost on open market operations; reducing inflation by 30% – BoG

The Bank of Ghana (BoG) has clarified that its recent loss of GH₵10.50 billion for the financial year ending 2023 does not indicate a loss of policy effectiveness.

The Central Bank explained that it incurred GH₵8.3 billion on open market operations, which significantly contributed to the 2023 loss, compared to GH₵1.7 billion in 2022.

Addressing the issue in an interview with Citi Business News, Bernard Otabil, Director of Communications at the Central Bank, stated that the BoG’s actions to control inflation reinforce their credibility despite the loss.

"First, central banks pursue national welfare and not profits. So, in the case of the Bank of Ghana, from the peak of 54.1 per cent at the end of December 2022, headline inflation more than halved to 23.2 per cent at the end of December 2023.

"Compared to the GHc1.7 billion cost on open market operations in 2022 shows a more than fivefold increase in mopping up liquidity from the economy to reduce inflation. So if you scrutinise the financial statement you find that whereas slower depreciation in the rate of the currency led to a relatively lower charge on the revaluation loss and the exchange difference account, the GHc4.27 billion recorded this year is significant also, contributing to the loss position of 10.5 billion cedis,” he said.

Mr. Otabil further noted that the 2023 financial statements demonstrate the Central Bank's commitment to price stability and the well-being of all Ghanaians.

“The Bank of Ghana is committed to pursuing policies aimed at achieving a stable level of inflation- in line with its medium-term target. The current medium-term target is 8 per cent and this is the level that monetary policy seeks to achieve, though it will tolerate inflation fluctuations of plus/minus 2 percentage points of this medium-term target.

"Bringing inflation down to the target level is a precondition to achieving sustainable economic growth and, over the long term ensuring economic prosperity in Ghana and increasing welfare of the Ghanaian population. Achieving low and stable inflation helps to promote exchange rate stability under a floating currency regime,” he added.

-Citi Newsroom

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