The Bank of Ghana (BoG) achieved one of the most dramatic disinflation outcomes in recent emerging market history in 2025, but the instrument that delivered it has left the central bank carrying a structural cost burden that will shape its financial position well into 2027.
The central bank’s total operating expenses nearly doubled to GH¢37.91 billion in 2025, up from GH¢18.89 billion the previous year, with the cost of open market operations (OMO) rising sharply to GH¢16.73 billion from GH¢8.60 billion in 2024, making it the dominant single expense line on the Bank’s income statement.
OMO refers to the practice of issuing short-term securities to absorb surplus funds from the banking system. Unlike reserve requirements, which are non-interest-bearing, OMO instruments require the central bank to pay interest, creating a recurring cost that grows in direct proportion to the stock of sterilisation.
Outstanding sterilisation bills rose from approximately GH¢32.7 billion at the end of 2024 to GH¢93.56 billion by end-2025, while interest paid on these instruments reached approximately GH¢14.6 billion within a single year.
The scale of that expansion reflects the liquidity conditions of 2025. Strong gold export revenues, a sharp currency appreciation, improved fiscal discipline and rising external inflows all injected significant liquidity into the banking system. The BoG absorbed it aggressively through OMO to anchor inflation and prevent those inflows from loosening monetary conditions.
The results at the macroeconomic level were striking. Headline inflation fell from 23.8 percent to 5.4 percent, one of the steepest drops recorded globally in recent times; the cedi appreciated by over 40 percent; and gross reserves climbed to US$13.8 billion, equivalent to 5.7 months of import cover.
The BoG stated that the GH¢16.7 billion OMO cost represented the expense of liquidity sterilisation in a high-interest rate environment as part of its efforts to reduce inflation, and that the losses were a deliberate and necessary policy cost rather than mismanagement.
Critics, however, have raised questions about whether the chosen instrument was optimal. The Minority caucus in Parliament argues that the abandonment of a dynamic cash reserve ratio (CRR) framework in 2025 forced the Bank into heavier reliance on interest-bearing OMO bills, directly inflating the cost of sterilisation. Under a dynamic CRR system, the central bank ties reserve requirements to banks’ lending behaviour, absorbing liquidity through non-interest-bearing reserves rather than paid instruments.
The BoG has pushed back on that framing, defending the 2025 framework as appropriate given the scale and speed of liquidity inflows requiring management. It also argues that as inflation stabilises and policy rates continue to fall, OMO costs will naturally decline.
A further complication sits on the balance sheet. The Domestic Debt Exchange Programme (DDEP), completed in 2023, imposed a GH¢35.67 billion haircut on government securities held by the Bank. Parliamentary approval for that haircut remains pending, leaving a governance overhang that continues to shadow the BoG’s reported equity position, which reached negative GH¢93.82 billion by end-2025.
The Bank’s 2025 financial position was also supported by a GH¢9.6 billion one-off gain from gold asset sales under the Domestic Gold Purchase Programme (DGPP). Critics argue that stripping out that non-recurring item reveals a deeper structural tension: operating income without the gold sale would not have covered OMO costs, implying an underlying policy deficit.
The resolution of that tension points toward a more balanced sterilisation mix. A gradual shift back toward structural tools such as CRR, calibrated carefully to avoid tightening credit conditions, would reduce the Bank’s interest expenses while maintaining effective liquidity control. The objective is not to abandon OMO but to use it selectively for short-term adjustments rather than as the primary vehicle for managing persistent surplus liquidity.
That transition, if managed well, would reduce the Bank’s financial exposure as Ghana consolidates its macroeconomic gains. If global conditions deteriorate or fiscal discipline slips, the BoG may face renewed pressure to sterilise at scale, with the cost of doing so now an established and visible charge on its balance sheet.
