Borrowed calm: The structural risks behind the macroeconomic recovery

By Kenneth Kwamina THOMPSON

Switch on the television, listen to the radio, open a newspaper, scroll through your social media feed, and the message is the same. There is general back-slapping for inflation trending downwards into single digits, falling below the Bank of Ghana’s own medium-term target band of 6–10 percent.

The cedi, which was in freefall not long ago, has appreciated sharply and reserves have been rebuilt. The politicians, economists and commentators are pleased with themselves. The Bank of Ghana’s 2025 financial loss, they tell us, was “worth it” — the necessary price of restoring stability after the crisis of 2022–2023.

This claim cannot be disputed entirely; the stabilization is real. The policy costs were largely justified by the outcomes. And the distinction between a loss incurred while printing money and one incurred while withdrawing it is analytically important.

But I want to ask a more difficult question, is the stabilization ‘genuine’? The harder question is, is it durable? And on that question, the current optimism is at best, premature.

What we are experiencing is borrowed calm, stabilisation financed by instruments, reserves, and fiscal commitments whose sustainability is far from assured. The foundations are better, but the building is not yet built.

Fiscal discipline – The weakest link

Let us give credit where it is due. The 2025 context genuinely differs from 2022–2023. In that earlier period, Bank of Ghana losses arose from financing government deficits, expanding reserve money, and feeding the inflation that burned every Ghanaian household.

In 2025, the losses arose from a different set of causes entirely. Open Market Operations (OMO) were the largest single driver at GH¢16.73 billion. But the accounts reveal multiple pressures operating simultaneously: a net loss on gold deals of GH¢9.05 billion across the Gold for Reserves and Gold for Oil programmes; revaluation and exchange losses of GH¢5.47 billion as the cedi’s own appreciation worked against the Bank’s foreign-currency-denominated assets; and GH¢5.22 billion in other operating expenses.

Together these produced total operating expenses of GH¢37.91 billion against total operating income of GH¢22.28 billion. OMO was the most important driver, and the most important to understand. But it was not the whole story, and the full picture matters.

But here is the uncomfortable truth. The OMO programme was essentially a compensating mechanism for continued fiscal indiscipline. The Bank of Ghana’s own audited financial statements for 2025 put a precise number on the cost: GH¢16.73 billion in interest expense on open market instruments, up from GH¢8.60 billion in 2024, nearly double in a single year. That GH¢16.73 billion is the monetary cost of mopping up the excess liquidity that accumulated in the system.

When governments spend beyond their means and finance that gap through domestic borrowing, the resulting money creation is precisely what central banks deploy OMO to sterilise.

The scale of the sterilization effort and therefore its cost is a direct function of how much excess liquidity there is to absorb. You do not need GH¢16.73 billion worth of mops unless there is a significant flood. The tool changed. The underlying pathology did not.

The scale of the problem is visible in the BoG balance sheet itself. Liabilities under money market operations, the stock of outstanding OMO instruments rose from GH¢32.68 billion at end-2024 to GH¢93.56 billion at end-2025.

That is a near-tripling of the OMO stock in a single year. The Bank did not build this instrument mountain by choice. It was the monetary policy response to the fiscal conditions it was given to work with.

Will the Ministry of Finance hold the line through a full electoral cycle? Ghana’s track record answers that question uncomfortably. Every single IMF programme this country has entered has involved fiscal slippage and it typically accelerates as elections approach. Year one of this administration already delivered significant slippage. The 2028 election cycle begins building fiscal pressure well before polling day.

If slippage recurs on a similar scale, the Bank of Ghana faces a stark choice: deploy another expensive OMO cycle and deepen its already catastrophically impaired balance sheet, or step aside and allow inflation to reflate. Neither option is attractive. Neither restores the credibility so expensively rebuilt.

The OMO trap – Expensive to exit

The optimists tell us that lower lending rates will follow, credit will flow to businesses, jobs will be created, and the real economy will feel the benefit. I want that to be true. But the BoG’s own accounts already tell us something important about how far we are from that transmission working. The Bank’s loans and advances to financial institutions fell from GH¢4.18 billion in 2024 to GH¢2.85 billion in 2025, a 32 percent drop in a single year.

Meanwhile deposits from commercial banks held at the BoG rose from GH¢64.56 billion to GH¢74.21 billion over the same period. Banks were simultaneously borrowing less from the central bank and depositing more with it.

That is not the picture of a financial system channeling capital toward productive activity. What this framing does not fully reckon with is the structural difficulty of that transmission pathway.

Lower lending rates require unwinding the OMO instruments. But with GH¢93.56 billion of OMO stock on the Bank’s balance sheet, nearly three times the year-end 2024 level unwinding returns an enormous volume of liquidity to the banking system.

If that liquidity returns before Ghana’s productive capacity has expanded sufficiently to absorb it non-inflationary, inflation re-ignites. The Bank of Ghana is paying interest on these instruments at rates tied to the monetary policy rate. It cannot do so indefinitely. But the exit is as dangerous as the entry. This is the OMO trap, and it is underappreciated in the current public debate.

The BoG’s own Directors acknowledge this directly. Their forward-looking assessment identifies “a slower-than-projected disinflation path” as a material downside risk — one that would delay the easing of the monetary policy rate and sustain elevated interest expense on monetary operations. In other words, the BoG itself knows that if the disinflation story stalls, the trap tightens.

Growth, credit, jobs, that is the right destination. Nobody disputes it. But the road runs directly through the most technically demanding monetary management exercise Ghana has attempted in a generation. Identifying the destination is not the same as navigating the road.

The balance sheet – A negative equity central bank

The Bank of Ghana recorded a loss of GH¢15.63 billion for 2025. That follows a loss of GH¢9.49 billion in 2024. This has resulted in a negative equity position of GH¢96.28 billion at end-2025. In plain English, the central bank’s liabilities exceed its assets by nearly GH¢96 billion. The institution at the heart of Ghana’s monetary system is technically insolvent.

A central bank is not a commercial bank. Its ability to operate does not depend on positive equity in the conventional sense. It can create money to meet its obligations, which a commercial institution cannot.

The BoG’s auditors, KPMG, have issued an unqualified audit opinion and the Directors have confirmed policy solvency. That assessment is based on the recapitalisation MOU with the Ministry of Finance and projected improvements in the macroeconomic environment.

The Bank’s policy solvency, its ability to fund its monetary operations from its own income improved in 2025, supported by a remarkable GH¢9.57 billion gain from gold sales. Strip out that gold gain, and the underlying operational picture is considerably more challenging.

The negative equity of GH¢96 billion is not a theoretical figure. It represents a real constraint on the Bank’s operational and policy flexibility and a real fiscal claim on the Ghanaian taxpayer via the recapitalization program.

The Cedi’s strength is partly borrowed

The cedi’s appreciation is real, purchasing power has returned to some degree. Import costs have fallen. Business confidence has improved. These are genuine gains, but an overvalued cedi is not a free lunch, it creates its own reversal risk that is already building.

Our exporters find their goods more expensive in international markets. Meanwhile, cheaper foreign goods pour in, displacing local production. Walk through any market in Ghana and count the Chinese goods. When the market eventually concludes the rate is unsustainable, the reversal will not be gentle or gradual. It will be sharp and disorderly.

The BoG’s own financial statements flag “adverse exchange rate movements that could generate further revaluation losses on the foreign reserve portfolio” as a key sensitivity risk. The exchange and revaluation losses on gold, SDRs, and foreign securities reached GH¢23.62 billion in 2025.

Cedi strength, in other words, has its own financial cost for the central bank. The cedi’s current strength is borrowed time unless we use this window to meaningfully grow the export base. That is the work that stabilisation alone cannot do for us.

Commercial banks – Structurally misaligned with the real economy

Throughout 2025, Ghana’s commercial banks discovered a very comfortable arrangement: earn high, risk-free returns by parking money with the central bank through OMO instruments.

The BoG’s financial statements confirm the scale of this in two ways. Deposits from commercial banks held at the BoG rose from GH¢64.56 billion to GH¢74.21 billion. At the same time OMO liabilities — the Bank’s obligations to those same depositors — ballooned from GH¢32.68 billion to GH¢93.56 billion. GH¢61 billion of additional capital, parked with the central bank in a single year rather than deployed into the productive economy.

No difficult credit assessments, no SME relationship managers chasing loan repayments. Just sovereign paper and handsome yields. That experience will not merely adjust banks’ short-term behavior; it will fundamentally recondition their institutional risk appetite. The safest and most profitable trade is lending to the central bank, not to Ghanaian businesses.

Redeploying that capital into trade finance, SME lending, and the productive sector does not happen automatically when OMO rates fall. The SME and informal sectors, which generate the majority of Ghana’s employment, could face a sustained credit drought precisely during the period when stability should be delivering a growth dividend. That would be the cruelest outcome of all. The calm achieved, but its benefits locked away from the people who need them most.

The BoG’s own regulatory framework makes this structural misalignment worse, not better. The financial statements disclose what is called a Cash Reserve Ratio (CRR) regime. Here is how it works in plain terms.

Every commercial bank in Ghana is required by law to keep a portion of its customers’ deposits locked up at the Bank of Ghana as a reserve, money it cannot lend out or invest. Think of it as a compulsory savings jar that sits at the central bank.

The size of that jar is determined by how much the bank is already lending to its customers. This is where it gets interesting. If a bank is lending generously — its loans are above 55 percent of its deposits — it only has to keep 15 percent in that locked jar. But if a bank is lending very little — its loans are below 40 percent of its deposits — it must keep 25 percent locked away.

The bank that is doing the least to support the economy by actually lending money to businesses and households is penalised with the largest reserve requirement, forcing even more of its funds to sit idle at the central bank. The bank that lends the most is rewarded with the smallest reserve requirement.

The intended logic is presumably to encourage lending. But in the current environment — where banks have found it far more profitable and far less risky to park money in OMO instruments than to lend to Ghanaian businesses — the effect is the opposite.

The banks least inclined to lend are precisely the ones being required to push the most money onto the BoG’s balance sheet. Whatever the original policy intention, the practical outcome deepens the very misalignment this article is warning about.

The recapitalisation commitment – Paper versus practice

The 2026–2032 recapitalisation MoU between the Ministry of Finance and Bank of Ghana was signed on 6 January 2025. It is now a matter of public record in the BoG’s audited financial statements.

The Directors describe it as providing for a “phased capital injection, structured as non-tradable, zero-coupon bonds, to avoid generating new interest expense obligations.” But the commitment spans three budget cycles and potentially two administrations. Every scheduled transfer will compete with roads, schools, hospitals, and the political spending priorities of whoever is in power at the time.

The starting point matters. The Bank needs to restore positive equity from a GH¢96.28 billion negative position. Even with the phased injections, the BoG’s own projections target positive net equity only by 2032. Seven years. That is seven years during which Ghana’s central bank operates with a structurally compromised balance sheet, dependent on government transfers materialising on schedule across administrations.

If recapitalisation tranches are delayed or restructured, the Bank of Ghana’s balance sheet remains impaired and an impaired central bank is a constrained central bank, precisely when we may need it most. The BoG’s own Directors identify “delays in the execution of the agreed recapitalisation tranches from the Ministry of Finance” as one of the three material downside risks to their going concern assessment. They are not complacent about this.

The gold question – What the accounts tell us

The accounts record a net loss on gold deals of GH¢9.05 billion in 2025, alongside a gain on the sale of refined gold of GH¢9.57 billion. The Directors provide a detailed disclosure of the Domestic Gold Purchase Programme (DGPP), explaining three channels of gold acquisition: refined gold from mining companies placed with international bullion banks; dore gold from approved aggregators sent to LBMA-certified refineries; and dore gold from artisanal miners purchased through GOLDBOD and exported in unrefined form to foreign buyers for foreign exchange.

The DGPP is described as having “contributed meaningfully to the stabilisation of Ghana’s foreign exchange market.” That is a legitimate and important function of a central bank reserve management programme.

And yet there is a net loss on gold deals of GH¢9.05 billion sitting in the income statement. How are the transactions between the purchase price from artisanal miners, sale price to foreign offtakers, and the resulting foreign exchange receipts accounted for? The KPMG auditors have audited this and issued an unqualified opinion.

An unqualified opinion means the accounts fairly represent what happened; it does not answer the policy question of whether the program’s structure represents value for the Ghanaian sovereign.

Transparent governance of sovereign gold reserves is not optional. For a central bank operating with GH¢96 billion in negative equity, every transaction that touches reserve assets must be beyond question.

Conclusion – Stability is not security

Ghana’s 2025 macroeconomic stabilisation represents a genuine achievement. Inflation is below target. The cedi has strengthened. The BoG deployed the right monetary tool, even at enormous financial cost.

But reading the Bank of Ghana’s own audited financial statements is a clear reminder of the challenges ahead. A loss of GH¢15.63 billion, negative equity of GH¢96.28 billion. OMO liabilities that tripled in a single year to GH¢93.56 billion. An interest cost on monetary operations of GH¢16.73 billion.

A recapitalization program dependent on seven years of government transfers across multiple administrations. These are not commentary or analysis. They are the numbers in a KPMG-audited set of accounts approved by the Board of Directors on 29 April 2026.

For sustained ‘calm’ four things must hold simultaneously and none are guaranteed. Fiscal discipline must survive an electoral cycle that Ghana has never successfully navigated without slippage.

The OMO exit from a GH¢93.56 billion stock must be managed with surgical precision to avoid reflating what was so expensively suppressed. The current account must structurally improve through export growth, not merely be flattered by a temporarily strong cedi. And the recapitalisation commitments must be honoured in full by each successive administration.

The foundations are better than they were in 2022 and we must applaud the Bank of Ghana for that. But better foundations do not constitute a finished building. We are not at the end of Ghana’s economic repair. The decisions made in the next 24 months will determine whether the calm we are currently experiencing is earned or merely borrowed.

This is not a time to celebrate. It is a time to be vigilant.

Data note: All Bank of Ghana financial figures in this article are drawn from the Bank of Ghana Consolidated and Separate Financial Statements for the year ended 31 December 2025, audited by KPMG and approved by the Board of Directors on 29 April 2026. Key figures: 2025 loss GH¢15.63bn; 2024 loss GH¢9.49bn; total operating expenses GH¢37.91bn; total operating income GH¢22.28bn; negative equity GH¢96.28bn (2025) vs GH¢61.32bn (2024); OMO liabilities GH¢93.56bn (2025) vs GH¢32.68bn (2024); cost of OMO GH¢16.73bn; net loss on gold deals GH¢9.05bn; revaluation and exchange losses GH¢5.47bn; gain on sale of refined gold GH¢9.57bn; commercial bank deposits at BoG GH¢74.21bn (2025) vs GH¢64.56bn (2024); BoG loans to financial institutions GH¢2.85bn (2025) vs GH¢4.18bn (2024); recapitalisation MOU signed 6 January 2025 targeting positive equity by 2032.

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