In 2024, the Bank of Ghana spent GH¢8.6 billion on open market operations to combat inflation and stabilize the economy. This article breaks down what that cost means for monetary policy, inflation trends, and the bank’s financial health moving forward.
The Rising Cost of Monetary Stability
In 2024, the Bank of Ghana (BoG) reported a total cost of GH¢8.6 billion for its open market operations (OMO)—a central tool for controlling liquidity and inflation. This was slightly up from GH¢8.37 billion in 2023 and contributed to an overall operating loss of GH¢9.49 billion for the year.
How Open Market Operations Work
OMO involves the use of short-term central bank securities to absorb excess money from the banking system. These instruments help limit inflation and support currency stability.
In 2024, the BoG’s operations:
- Absorbed GH¢134 billion in liquidity
- Represented 1.7% of Ghana’s GDP
- Reflected ongoing high interest costs tied to central bank securities
This marked a drop from 2023, when liquidity absorption stood at nearly 3% of GDP.
Inflation Trends and Policy Adjustments
Inflation peaked at 54.1% in 2023 but declined in 2024, settling around 23–25%. This allowed BoG to scale back some aggressive interventions while maintaining a tight monetary posture.
In early 2025, the BoG introduced:
- A 273-day sterilization bill to lock in liquidity for longer
- A revised Cash Reserve Ratio (CRR) framework to improve policy transmission
Despite easing, liquidity absorption remained high:
- February 2025: GH¢15.5 billion
- March 2025: GH¢21.6 billion
- April 2025: GH¢33.3 billion
Macroeconomic Performance in 2024
Ghana’s GDP grew by 5.7%, with notable contributions from:
- Industry: 7.1%
- Services: 6.1%
- Agriculture: 2.8%
Key growth sectors included mining, construction, crop production, and digital services.
BoG’s Financial Position and Losses
The central bank ended 2024 with a negative equity position of GH¢61.32 billion, slightly improved from GH¢65.34 billion in 2023.
Financial snapshot:
- Total Assets: GH¢215.06 billion
- Total Liabilities: GH¢276.38 billion
- Operating Income: GH¢9.4 billion (up from GH¢8.71 billion)
- Operating Expenses: GH¢18.88 billion (down from GH¢21.96 billion)
The reduction in expenses was mainly due to an accounting reclassification of exchange gains—not a cut in core policy costs.
Impact of the Gold-for-Oil Program
BoG incurred further losses through its involvement in the Gold-for-Oil (G4O) initiative:
- GH¢4.69 billion in seed capital
- GH¢1.82 billion loss in 2024
- Total losses exceeded GH¢2.1 billion
BoG formally exited the program in March 2025 after board approval.
IMF Collaboration and Recapitalization
To address ongoing losses, the BoG, Ministry of Finance, and the IMF signed a Memorandum of Understanding in January 2025 to recapitalize the bank. The goals are to:
- Rebuild financial buffers
- Ensure long-term solvency
- Protect the bank’s operational independence
The BoG also reaffirmed its commitment to a zero-financing policy under the IMF program—meaning no direct funding of government deficits.
Looking Ahead: Stabilization and Recovery
Despite its negative equity, BoG remains “policy solvent”, able to fund its operations through realized income. Key projections for 2025 include:
- Reduced cost of monetary operations
- Further disinflation
- Stabilized interest rates
- Lower forex revaluation losses
Conclusion
The Bank of Ghana’s 2024 performance reflects the challenges of managing inflation in a volatile economic environment. With IMF support in place and inflation trending down, the focus now shifts to restoring financial stability while sustaining monetary discipline.