The Bank of Ghana (BoG) has absorbed GH¢65 billion from circulation since the beginning of 2025 — a massive monetary tightening effort that Governor Dr. Johnson Asiama describes as “a costly but necessary sacrifice” to preserve macroeconomic stability and keep inflation in check.
Speaking at the Governor Talks Programme on the sidelines of the IMF/World Bank Annual Meetings in Washington, D.C., Dr. Asiama said the central bank’s aggressive open market operations — including bill issuance and liquidity sterilisation — have been critical in curbing inflationary pressures that threatened to undermine recent economic gains.
“The cost to the central bank’s balance sheet has been immense,” Dr. Asiama acknowledged. “Almost total money supply is around GH¢85 billion currently, and out of that, the sterilisation we have done this year alone accounts for about GH¢65 billion. But there’s a price to stabilisation. There’s a cost to it.”
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A Costly Battle Against Inflation
The central bank’s intervention has come at a steep price. To withdraw excess liquidity, the BoG has been issuing high-interest short-term papers and bills, which drain liquidity but also elevate the bank’s interest expenses.
Dr. Asiama admitted that this balancing act — maintaining price stability while safeguarding the Bank’s own financial health — represents one of the toughest policy challenges of the year.
“We are in discussions with the fiscal authorities for them to assist us, probably to pick up part of that cost,” he said. “As they always say, stability is a public good. When there’s macroeconomic stability, someone needs to pay for it.”
The Governor’s comments underscore the mounting fiscal-monetary coordination challenge facing Ghana, where achieving disinflation has required expensive liquidity management operations.
Rebuilding a Fragile Balance Sheet
Beyond short-term liquidity control, Dr. Asiama noted that the BoG is also focused on rebuilding its weakened balance sheet, following years of fiscal dominance and the fallout from the 2022–2023 domestic debt restructuring programme.
“We came in to meet a bank that was hardly solvent, policy-wise,” he said. “Rebuilding the balance sheet is being tackled alongside the stability we are achieving.”
The debt exchange program, which converted government bonds into longer-term, lower-yield instruments, significantly impacted the central bank’s capital position. Despite these constraints, the BoG has sustained its sterilisation operations — a move many analysts see as critical for restoring policy credibility.
Open Market Operations Drive Stability
The Bank of Ghana’s open market operations — including repurchase agreements, treasury bills, and liquidity absorption instruments — have been at the heart of its inflation-fighting toolkit this year. These measures have helped stabilize the Ghana cedi and moderate headline inflation, which has shown signs of easing in recent months.
Economists say the central bank’s actions have reinforced market confidence and strengthened the transmission of monetary policy. However, they warn that sustaining these operations without fiscal backing could strain the BoG’s reserves and profitability.
“The cost of maintaining stability could eventually weigh on the Bank’s financial position if government support does not materialise soon,” said one analyst familiar with the matter.
Stability at All Costs
Despite the financial strain, Dr. Asiama maintains that price stability remains the cornerstone of Ghana’s economic recovery. He stressed that the central bank will continue to deploy every available instrument to protect the value of the cedi and restore macroeconomic balance.
“We know the cost is heavy, but stability remains the foundation of growth,” he noted. “We must all share in that responsibility.”
As Ghana navigates a post-crisis environment marked by global uncertainty, fiscal consolidation, and tightening liquidity, the Bank of Ghana’s resolve highlights a broader truth: monetary stability comes at a price — but one the country cannot afford to ignore.
Source: Accra Street Journal
Last Updated on October 20, 2025 by Samuel Kwame Boadu
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Samuel Kwame Boadu is a Ghanaian media entrepreneur and storyteller with a passion for amplifying urban voices and uncovering everyday truths. He is the Editor-in-Chief and Founder of Accra Street Journal, a dynamic digital platform dedicated to capturing the pulse of Ghana’s capital—its people, culture, challenges, business, sports and innovations.
