Fight against inflation: BoG incurs GH¢8.4bn cost
Dr Ernest Addison — BoG Governor

Fight against inflation: BoG incurs GH¢8.4bn cost

The Bank of Ghana (BoG) incurred a cost of GH¢8.4 billion in its open market operations in a bid to tame inflation in 2023. 


This compares to a cost of GH¢1.7 billion in 2022. The increase in costs associated with open market operations for 2023 was driven in large part by the need to mop up excess liquidity in the economy in 2023 and to support the dis-inflation process envisaged in the overall macroeconomic adjustment program. 

This open market operations activity was able to reduce inflation by over 30 percentage points from 54.1% in 2022 to 23.2% in 2023.

The rise in the cost of its open market operations led to the central bank recording a loss of GH¢10.5 billion in 2023, an improvement over the 2022 loss of GH¢60.8 billion.

Addressing the media on the central bank’s financial performance, Director of Communications at the Bank of Ghana, Bernard Otabil, said the BoG’s financial results was often a poor guide of its success.

“The most important thing to appreciate is that a loss does not imply loss of policy effectiveness, therefore we should not indulge in harmful self-fulfilling prophecies as it will not be anybody’s interest.

“In fact, we have also defined policy solvency in the financial statements which basically means the central bank must generate enough realised income to cover costs associated with the conduct of monetary policy,” he said.

In 2023, total operating income of the Bank and the Group increased by 47.3% to GH¢8.8 billion, driven by interest earned on the Bank’s investments in securities and bonds held abroad, fines imposed on institutions for regulatory breaches, and fees and charges.He said the income of GH¢8.8 billion therefore offsets the cost associated with the conduct of monetary operations which was GH¢ 8.4 billion. 

The positive policy solvency factor of GH¢0.4 billion in 2023, is indicative that the Bank continues to be policy solvent just as it was in 2022 when a policy solvency factor of GH¢4.27 billion was recorded

Beneficial actions 

Mr Otabil said central bank’s actions are socially beneficial actions and that was the special character of central across the globe.

He emphasised that central banks could make losses, get into negative accounting equity and still function successfully, adding that central banks were therefore not expected to compromise policy objective to report profits.

“Our strong actions to control inflation reinforce our credibility and commitment to our mission Showing that we can effectively manage inflation, boost confidence both domestically and internationally.“This trust is vital for attracting foreign investment and maintaining favorable trade conditions,” he stated.

The Director of Communication reiterated the BoG’s commitment to pursuing policies aimed at achieving a stable level of inflation in line with its medium term target of 6 to 10 per cent.

He said this was a precondition achieving sustainable economic growth in the country and over the long term ensuring economic prosperity and increasing the welfare of Ghanaians.“

Achieving low and stable inflation helps to promote exchange rate stability under a floating currency regime. 

The 2023 financial statements demonstrate our unwavering commitment to our price stability mandate,” he said.

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