From crisis to confidence: The remarkable economic turnaround

By Nelson Cudjoe KUAGBEDZI

Not long ago, Ghanaians were watching the cedi lose value almost weekly, prices at the market were rising faster than wages, and the government was struggling to pay its debts. It felt, to many, like the economy was in freefall.

Today, that same cedi is the best-performing currency in the world. Inflation has dropped from nearly 24% to single digits. Reserves are at a record high. This turnaround did not happen by accident and it did not come without cost. This piece explains what happened, what it cost, and where we go from here.

A Fragile and weak Economy

Ghana entered 2025 in a shaky state. The economy had just come through one of its most turbulent periods in decades. While early signs of recovery were visible, the underlying conditions were still under serious stress.

Headline inflation ended 2024 at 23.8% nearly three times the Bank of Ghana’s target of 8 8±2 %. The cedi had lost about 20% of its value, pushing up the cost of imported goods and rattling both businesses and investors. Lending rates were above 30%, making it nearly impossible for ordinary businesses and entrepreneurs to access affordable credit.

The public debt stood at 61.8% of GDP, the fiscal deficit at 7.9% of GDP, and though Ghana held US$9.1 billion in foreign reserves (covering 4.1 months of imports), that buffer was narrowing. The current account balance – a measure of how much more we spend abroad than we earn – was US$1.5 billion.

These were not just numbers on a page. They translated into real pain: expensive loans, costly imports, and an economy that wasn’t creating enough breathing room for households or businesses. The Bank of Ghana itself was not spared. When the government restructured its debt through the Domestic Debt Exchange Programme (DDEP), the Bank which held government securities as part of its portfolio took a direct hit.

A 50% haircut on those holdings meant the Bank’s income dropped sharply. Every year since, it loses roughly GHS 13 billion in foregone income as a direct consequence of that restructuring. This is not money that left the building: it is income that simply stopped coming in.

The Policy Response: A Coordinated, data driven and well thought through response.

The Bank’s response was built around four pillars, each targeting a specific weakness in the economy.

Tight monetary policy and liquidity management

The Bank held its policy rate at high levels to bring inflation firmly under control. As disinflation became clearly established in the data, it began cautiously cutting rates. At the same time, it intensified open market operations (OMO) essentially buying back excess money circulating in the banking system to make monetary policy signals more effective.

This cost money. OMO interest expenses roughly doubled from GHS 8.6 billion in 2024 to GHS 16.7 billion in 2025. Think of it as the medical bill for treating the inflation fever: painful, but necessary.

Building up external reserves through gold

The Bank scaled up its Domestic Gold Purchase Programme (DGPP), buying gold locally from miners in cedis, refining it, and exporting it to build up foreign exchange reserves. A new foreign exchange framework was introduced in November 2025, and the reserve portfolio was diversified. In February 2026, Parliament went further, passing Ghana’s National Reserve Accumulation Programme (GANRAP) enshrining this gold-backed reserve strategy in law.

Strengthening the banking sector

Supervisors worked to ensure banks absorbed shocks rather than pass them on to customers. Capital gaps were closed, bad loan timelines enforced, and governance standards tightened. By end-2025, the capital adequacy ratio (a measure of bank health) improved from 14% to 15%, above the international Basel requirement of 13%. Non-performing loans – loans that borrowers aren’t repaying – fell from 22% to 18.9%.

Key regulatory infrastructure was also strengthened

Several important milestones were achieved in 2025. A National Payment Systems Strategy (2025–2029) was completed, laying out a five-year plan for digital payments and financial inclusion. New guidelines for money transfer operators were introduced to better regulate Ghana’s US$4 billion+ annual remittance flows. The Bank also supervised the testing of new fintech solutions and passed the VASP Act, bringing virtual asset providers (think cryptocurrency platforms) under formal regulation for the first time.

The Results: A Remarkable Turnaround

The numbers speak clearly. By December 2025, Ghana had achieved one of the most impressive economic recoveries in recent emerging market history. Headline inflation fell from 23.8% to 5.4%, one of the steepest drops recorded globally in recent times.

The cedi appreciated by over 40%, earning the title of the world’s best-performing currency in 2025. Gross reserves climbed to US$13.8 billion equivalent to 5.7 months of import cover. The fiscal deficit shrank from 7.9% to just 1.0% of GDP, and the current account swung from a US$1.5 billion deficit to a US$9.4 billion surplus.

Real GDP grew to 6.0%, with non-oil sectors leading the charge, a healthy sign that the recovery is broader than just commodity prices. The banking sector also emerged stronger. Total banking assets grew 21.5% to GHS 447 billion, loans rose 16.2% to GHS 111 billion, and deposits grew 17.8% to GHS 325 billion. The number of banks below the minimum capital requirement fell from 11 to 5.

The Financial Cost: What Stabilisation Actually Cost the Bank

Central banks often absorb financial losses when implementing policies that benefit the broader economy. The Bank of Ghana’s 2025 accounts reflect exactly this. The gains for Ghanaian households, businesses, and government came with a corresponding financial cost to the institution that delivered them. It is important that Ghanaians understand what these costs are and what they are not.

DDEP income loss: The Bank lost an estimated GHS 13.4 billion in 2024 and GHS 13.0 billion in 2025 in foregone income. A structural, cumulative drag of GHS 26.4 billion over two years. This is income that was never received, not cash that left the vault.

OMO sterilisation costs: Draining excess liquidity from the banking system cost the Bank GHS 16.7 billion in interest expenses in 2025, up from GHS 8.6 billion the prior year. As inflation stabilises and policy rates continue to fall, this cost will naturally decline.

Gold programme accounting: Gold bought in cedis and recorded at the official interbank rate creates a technical accounting gap not a cash loss. In 2025, rapid cedi appreciation temporarily widened this gap. The actual reserve assets built through Ghana Accelerated National Reserve Accumulation Policy (GANRAP) remain fully intact.

Foreign currency revaluation: When the cedi strengthens, the cedi-equivalent value of the Bank’s foreign assets (held in SDRs, foreign securities, and gold) declines, a paper adjustment, not a real loss. This is simply the accounting mirror image of the gains recorded when the cedi weakened in 2024.

None of these financial effects impairs the Bank of Ghana’s ability to do its job. Its mandate is fully intact, its policy tools are operational, the banking sector is stable, reserves are at a record, the IMF programme is on track, and the most recent external audit returned a clean, unqualified opinion.

The Outlook: Ghana is Prepared for an Uncertain World

The global environment as of April 2026 is more turbulent than expected. Evolving trade policies are disrupting capital flows. Active regional conflicts have pushed Brent crude above US$100 per barrel – a third higher than Ghana’s 2026 budget assumption of US$75 -creating pressure on fuel costs at home. Global financing conditions have tightened, and commodity prices are volatile.

But Ghana’s position today is one of genuine strength. Inflation reached 3.2% in March 2026, the fifteenth consecutive monthly decline with seven of sixteen regions now recording falling prices. Gross reserves stand at US$14.5 billion(5.8 months of import cover). A trade surplus of US$3.7 billion was recorded in just the first two months of 2026, and economic activity grew 8.4% year-on-year in January 2026. The banking sector’s capital adequacy ratio has improved further to 22.07%. The IMF programme is on track for completion in August 2026, with five of six reviews completed and all performance targets met.

Priorities for 2026: From Stabilisation to Growth

Monetary and market discipline: In March 2026, the MPC cut the policy rate by 150 basis points to 14.0% a move earned through sustained disinflation. The focus now shifts to completing this normalisation while building depth in Ghana’s fixed income market. Trading volumes on the Ghana Fixed Income Market more than doubled in 2025; the goal now is to move from restored activity to a genuinely liquid secondary market.

Banking sector quality and governance: The supervisory focus sharpens on credit quality over volume. The NPL reduction roadmap – targeting 10% by end-2026 – remains a firm benchmark. Governance expectations for bank boards are rising, with greater scrutiny on risk management, anti-money laundering compliance, and operational resilience. The easing rate environment also creates an opportunity to responsibly restructure stressed but viable loan relationships.

Digital infrastructure and regional integration: Payment’s infrastructure, digital settlement rails, and data standards are now strategic national assets. Faster settlement, interoperable platforms, and stronger fraud controls directly reduce the cost of doing business in Ghana. Innovation that lowers costs and expands financial access will be actively supported with a level playing field between banks and non-banks. Ghana is also positioning itself as a regional hub for financial integration under AfCFTA, exploring new instruments for intra-African trade settlement.

Conclusion

Ghana’s economic story over the past year is, at its core, a story about the cost of discipline. Real stabilisation required real sacrifice from households that endured high prices, to businesses that paid steep borrowing costs, to the Bank of Ghana itself, which absorbed billions in structural losses to deliver the recovery. The data shows that the sacrifice worked. Inflation is in single digits. The cedi is the world’s strongest-performing currency. Reserves are at a record high. Confidence from consumers, businesses, and investors has returned.

The task ahead is not to celebrate, but to consolidate. Ghana has built genuine policy space for the first time in years. The question now is whether government, institutions, and businesses will use that space wisely to invest, reform, and grow in a way that makes the next crisis less likely, and less damaging when it comes. The foundation has been laid. What is built on it is now Ghana’s collective responsibility.

The writer is a Tax and Finance Analyst | [email protected].

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