BoG Losses Prevented Business Collapse Economists Say 15.6 Billion Cedis

Ghana's parliamentary Majority Caucus has asserted that the Bank of Ghana's (BoG) GHS 15.6 billion loss in 2025 was a crucial intervention. This action prevented a widespread collapse of businesses and deeper economic hardship across the country. These financial outcomes sparked public debate, particularly concerning the central bank's negative equity.

Eric Afful, Chairman of Parliament’s Committee on Economy and Development, explained this position on Tuesday, May 5, 2026. He stated that the losses were not a failure but a calculated cost to stabilize the economy. He emphasized that without these decisive policy interventions, many firms, especially small and medium-sized enterprises, would not have survived the challenging economic period. The BoG's reported net loss in 2025 sparked renewed debate, with the opposition New Patriotic Party and the Minority Caucus citing a higher loss figure of GHS 44 billion.

This assertion by the Majority Caucus fits into Ghana's ongoing economic recovery narrative following periods of high inflation and currency depreciation. The country has been navigating debt sustainability issues and implementing fiscal consolidation measures. The BoG's actions, including significant monetary tightening, were part of a broader strategy to restore macro-economic stability. Improved indicators like lower inflation and stronger reserves signal a potential turnaround.

“The Bank of Ghana absorbed the shock so Ghanaian businesses would not collapse,” Eric Afful said. He highlighted the sharp reduction in inflation as a primary benefit to businesses. High inflation had increased production costs and reduced consumer spending, threatening many firms. “By aggressively tightening monetary conditions, the Bank brought inflation down to single digit, giving businesses room to recover and plan again,” he added.

The cost of open market operations (OMO) heavily contributed to the BoG’s losses. Mr. Afful noted these were necessary to manage excess liquidity and prevent a full-blown price spiral. Such a spiral could have severely impacted firms in manufacturing, trade, and services. He also pointed to the sharp appreciation of the Ghana cedi in 2025 as critical support. This appreciation offered a “lifeline” to businesses needing imported inputs or managing foreign currency obligations.

“When the cedi stabilised and strengthened, businesses importing raw materials, machinery and fuel got immediate relief,” Mr. Afful stated. He acknowledged the valuation losses on the Bank’s foreign assets. However, he argued these movements saved companies from massive exchange losses that could have led to insolvency. Furthermore, he attributed the Domestic Debt Exchange Programme (DDEP) as vital for easing pressure on interest rates. This programme, despite reducing the Bank’s interest income, supported private sector credit by restoring debt sustainability.

“Without restoring debt sustainability, government borrowing would have crowded out businesses completely,” he explained. He underscored that while the DDEP caused hardship for some bondholders, it prevented the collapse of the financial system. That system is crucial for businesses. Mr. Afful argued that central banks do not operate like commercial entities. He stated they should not be judged solely by profit metrics. He likened central bank losses during a crisis to an insurance premium. “The Bank of Ghana’s balance sheet took the hit so factories could keep operating, traders could restock, jobs could be preserved and confidence could return,” he concluded.

Going forward, policymakers and market observers will monitor the BoG’s recapitalization efforts. A stable and credible central bank is essential for sustained private sector growth. Future economic indicators, especially inflation and cedi stability, will confirm the effectiveness of these past interventions. Parliament will continue its oversight role to ensure accountability in economic management.