Zeitgeist: The cost of life

A Clear Explanation of Bank of Ghana’s 2025 Financial Results

By Hene Aku Kwapong, PhD

The easiest way to understand Bank of Ghana’s 2025 results is to stop thinking of it as a profit-making institution. It
isn’t. It is closer to a national immune system. Its job is to keep the economy stable, even if that means taking on
costs.

When Ghana faced its severe economic crisis in 2022, the Bank of Ghana stepped in aggressively. Like a body fighting a serious infection, the response was necessary but expensive. What we are seeing in the 2025 financial statements is the cost of that fight, alongside early signs of recovery.

The headline figure is a GH¢15.6 billion loss, larger than the GH¢9.5 billion loss in 2024. At first glance, that looks like things are getting worse. But that conclusion would be too simplistic.
Let me outline the narrative that makes this obviously bad-looking results more encouraging. I’m going to use this Chart I put together, below.

The four forces shaping the results

To understand what is going on, it helps to break the story into four main drivers.

1. The cost of fighting inflation
The biggest single expense is GH¢16.7 billion spent on monetary operations, nearly double the previous year.
Here is what that means in plain terms. The Bank of Ghana has been trying to reduce inflation by pulling excess money out of the economy. To do that, it issues its own short-term instruments and pays commercial banks to hold money instead of lending it out.
This is standard central banking practice. The problem is that it is expensive. The amount of these instruments outstanding jumped from GH¢32.7 billion to GH¢93.6 billion in one year.

So the central bank is essentially paying high interest to stabilize the economy. That cost shows up as a loss. These losses are not a sign of failure. They are evidence that policy is working. Tightening monetary conditions is exactly how inflation is brought under control.

2. The strengthening of the Cedi
One of the most important developments in 2025 is that the Ghanaian cedi strengthened by about 29 percent against the US dollar.
That is a major turnaround after years of decline. It signals improving confidence in the economy.
But there is a catch. The central bank holds most of its assets in foreign currencies like dollars. When the cedi strengthens, the value of those assets falls when measured in cedis.

Think of it this way. If you have 1 billion dollars, and the exchange rate moves from 14.7 to 10.45 cedis per dollar, the value of your holdings drops in cedi terms. You still have the same dollars, but they are now worth less in local currency.
This creates what is essentially an accounting loss.

In 2025, this showed up as:
GH¢5.47 billion loss in the income statement
GH¢23.6 billion loss in reserves (equity)

These are large numbers, but they do not mean money was actually lost. They reflect a change in exchange rates, not
a loss of assets.

Ironically, a stronger currency is good for the economy but bad for the central bank’s reported finances.

3. Gold operations and accounting complexity
Gold has become an important part of Ghana’s economic strategy, and the central bank actively buys and sells it.
In 2025, gold prices rose sharply, by about 65 percent. Yet the accounts show both gains and losses from gold
operations. This seems contradictory, but it is mostly due to accounting rules.
Under one program, the Bank bought and sold gold, generating significant revenue and a net gain from actual transactions.
At the same time, it recorded what appears to be a large loss. This is mainly because accounting rules require previously recorded gains to be “recycled” through the income statement when the gold is sold.

So what looks like a loss is largely an accounting adjustment rather than a real economic loss.
A second program, which used gold to purchase oil during the crisis, was wound down with only a small loss. This suggests it served its purpose as a temporary emergency measure.
Overall, gold remains a valuable reserve asset for the country.

4. The legacy of the debt crisis
This is the most serious structural issue.
The Bank of Ghana now has negative equity of GH¢96.3 billion, meaning its liabilities exceed its assets.
This did not happen overnight. It reflects several past interventions:

• Support for failed banks during earlier financial sector reforms
• Losses from restructuring government debt
• The ongoing cost of monetary tightening

Now, it is important to be clear. A central bank is not like a normal bank. It cannot “go bankrupt” in the usual sensebecause it issues the currency.
However, large negative equity does matter. It can affect credibility and may limit the central bank’s ability to operate independently.

At some point, the government will likely need to recapitalize the Bank. In simple terms, the state will need to repair its own financial institution.

What the balance sheet is telling us

Several indicators point to genuine progress:

• Foreign reserves are rebuilding
• Debt to the IMF is being reduced
• The currency has stabilized

At the same time, there are warning signs:

•  The cost of monetary tightening remains very high
• Government cash buffers have declined
• The central bank’s negative equity has worsened

So the picture is mixed, but not bleak.

The IMF program is working
Ghana continues to receive support from the International Monetary Fund under a multi-year program.
Most of the funds have already been disbursed, and the remaining portion is expected soon. Importantly, this financing carries very low interest, easing the burden on the country.

The strengthening currency, improving reserves, and declining IMF obligations all suggest that the stabilization program is on track.

Here is the bottom line;

The 2025 results reflect a central bank doing exactly what it is supposed to do in a crisis.
It tightened monetary policy aggressively. It supported the economy during a debt crisis. It managed foreign reserves and gold assets under difficult conditions.

All of this comes at a cost, and that cost shows up as losses.
The real concern is not the losses themselves, but the growing negative equity. That will eventually need to be addressed through government action.
For now, the key point is this. The Bank of Ghana is is absorbing the financial cost of stabilizing the economy. And in several important ways, that stabilization effort is beginning to work.

Hene Aku Kwapong, PhD, is a CDD Ghana Fellow, Ecobank Ghana Board Member, and former Head of Management
for Royal Bank of Scotland EMEA Credit Markets. He is a graduate of the Massachusetts Institute of Technology and
Columbia University. He writes the “Re-Imagine Ghana” column for the B&FT