Bank Of Ghana’s Losses And Economic Stability In Ghana

This article aims to analyse few misconception about the ongoing debate in Ghana about the Bank of Ghana’s reported losses of negative equity in the 2025 financial statement. This has often been shaped more by political narratives than by economic understanding with political-capitalization from the opposition party (NPP). There is no economic rationale requiring a solvent, operational central bank to maintain positive equity. Historical experience demonstrates that central banks can continue to function effectively even with negative equity . For example , the Bank of Israel, the Czech National Bank, and the Central Bank of Chile have all managed successful monetary policies under such conditions. Moreover, occurrence of negative equity or recapitalization should not serve as opportunities for governments to influence or constrain a central bank’s independence in fulfilling its mandates.

In the case of the Czech National Bank, the significant expansion of its balance sheet during the foreign exchange intervention period (2013–2017) heightened sensitivity to exchange rate and interest rate movements. Subsequent appreciation of the Czech koruna led to large unrealized revaluation losses. Hungary, by contrast, saw its central bank expand its balance sheet through quantitative easing and the provision of low-cost liquidity to banks in 2020–2021, which considerably increased interest rate exposure. Hungary also stands out as the only country with legislation mandating recapitalization of its central bank within a specified period recently extended to five years under an amendment. Meanwhile, the National Bank of Poland and the National Bank of Romania expanded their balance sheets only modestly during the pandemic, conducting limited asset purchase programs.

Ghana’s Case: Bank of Ghana 2025 Negative Equity

Central bank losses do not automatically mean insolvency or failure, and the case of the Bank of Ghana (BoG) shows why context matters. In 2025, BoG reported an operational loss of GH₵15.6 billion (See page 5 BoG 2025 Financial Statement), but this figure should be understood as the result of policy actions, valuation effects, and program-specific costs rather than simple mismanagement. Similar large losses were seen in 2022, when now opposition NPP reported losses of GH₵60.81 billion (See page 56 , BoG 2022 Financial Statement) a period shaped by severe macroeconomic stress, debt restructuring, and exchange-rate instability. Taken together, these figures show that central bank balance sheets often reflect the broader economic environment more than institutional weakness. A comparison of BoG losses or negative equity of both 2025 and 2022 regimes is presented in Apendix A.

A major reason central banks record losses is the way they manage monetary stability. BoG’s 2025 losses were linked to monetary policy operations, the gold accumulation programme, and exchange-rate-related accounting adjustments. These activities are not unusual for a central bank that must control inflation, support the currency, and stabilize the financial system. In practice, the short-term cost of these interventions can appear as losses on paper even when the policy purpose is to protect the wider economy.

The gold accumulation programme is a good example of this issue. BoG attributed about GH₵9 billion of its 2025 accounting cost to this initiative, but that figure should not be treated as a realised loss because around (111 tonnes) of gold remain as reserve assets. In other words, the accounting treatment captures the cost of building reserves, while the underlying asset still has value and supports national stability. This shows how central bank reporting can look negative while the economic substance remains strategic and beneficial.

Exchange-rate movements also played a major role in BoG’s 2025 results. The bank recorded a GH₵19.32 billion charge in other comprehensive income, reflecting valuation changes as the cedi strengthened by about 41% during the year. While this appreciation reduced the local-currency value of foreign-denominated reserves, it also pointed to a more stable macroeconomic environment. Such valuation effects are important because they can create large accounting swings without implying that the central bank has made poor policy decisions.

The negative equity situation at BoG is also tied to earlier shocks, especially the 2022 Domestic Debt Exchange Programme. That programme incident damaged the balance sheet and created pressures that continue to shape the bank’s financial position even today. Even so, negative equity does not mean a central bank is insolvent in the way a commercial bank might be. It can be addressed through recapitalization, capital transfers from the government, and a broader fiscal reform agenda that preserves independence and credibility.

There are also encouraging signs in the wider policy framework. The Ghana Gold Board reported about GH₵960 million in revenue in 2025 and expenditure below GH₵120 million, suggesting it is on track for a policy solvency surplus over US$440 million ( See Table.1, page 7 BoG 2025 FS, calculations) . This performance supports the broader gold-for-reserves strategy and reinforces the idea that policy coordination can strengthen macroeconomic resilience. When managed well, such institutions can help reduce external pressure and improve confidence in the financial system.

Ibrahim Mahama Model (IMM)
A further policy recommendation is to consider an Ibrahim Mahama Model for strengthening reserve accumulation. Under this approach, large-scale mining companies could sell part or 100% of their output to GoldBod, with the proceeds directed into the Bank of Ghana’s reserve position. The model could also be expanded into a gold royalty payment system, in which mining firms pay Ghana’s portion in refined gold rather than cash equivalents. If properly legislated, this would give the state greater control over strategic natural resources while steadily building reserves for the medium and long term.

This approach would, however, is likely to face resistance from affected large scale mining companies, especially where existing agreements and contracts would need to be renegotiated. Nonetheless, the government would have significant leverage because the arrangement would align resource extraction with national reserve building and broader economic stability goals. In this sense, the proposal is not simply about taxation or collection (royalty payments); it is also about using Ghana’s mineral wealth more strategically to support monetary resilience and long-term policy independence.

It is also important to avoid overemphasizing partisan criticism of the Bank of Ghana’s negative equity position. The cedi appreciated by about 41% against the dollar in 2025 as compared to the previous regime’s where the Cedi experienced substantial depreciation against many major currencies over the same period, including the dollar (51-53%), pound (21%), yen (23.55%), and yuan (34.98%). That performance reflected strong reserves, high real interest rates, and improved investor confidence, although it was partly sustained by expensive open market operations that may not be fully sustainable over time. If sterilisation is reduced too sharply, excess cedi liquidity could weaken the currency again and reverse some of the gains households experienced in 2025.

BoG’s negative equity, should not be treated as a collapse or failure of the institution. Central banks are not commercial banks, and their role is not commercial profitability but price stability and financial system soundness. On that front, the bank delivered notable progress in 2025: inflation fell to 5.4% ( with 3.2% in march ), reserves reached historic highs, the banking sector returned to profitability, and the cedi recorded one of its strongest performances in recent years. These outcomes suggest that the bank has achieved policy solvency even while carrying accounting losses.

Table 1.

The gold programme also deserves recognition as a smart and innovative reserve-building strategy. By liquidating part of its gold holdings and using the programme to support reserve accumulation, the Bank of Ghana improved its external position and gained international commendation, including from the IMF. In that broader context, the policy achievements under the current administration represent an important recovery effort after the severe shocks of 2022, including inflation which was above 50%, sovereign default, debt restructuring, and currency collapse. The evidence suggests that the current approach has helped absorb shocks, restore confidence, and place the economy on a more stable path.

In conclusion, the Bank of Ghana’s reported losses and negative equity should be understood as part of a extensive macroeconomic recovery process rather than as evidence of institutional failure. The 2025 figures reflect the cost of stabilization, reserve accumulation, and exchange-rate management, while the gains in inflation control, reserve growth, and currency performance show clear policy progress. Rather than using these accounting outcomes for partisan attack, the debate should focus on strengthening transparency, protecting central bank independence, and sustaining the reforms needed to secure long-term economic stability in Ghana.

Authored by :
Evans DARKO, Ph.D., CREM Lab , University of Rennes, France.

Apendix A : Comparison of Financial Results the year 2025 and 20222

Financial Results 2025

Source: Bank of Ghana , 2025 Financial Statement

Financial Results 2022

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