Ghana Govt. Remains Committed to Restoring Bank of Ghana's Fiscal Discipline

• The Ghana government remains committed to maintaining fiscal discipline to support the Bank of Ghana's recovery, according to Seth Terkper, economic advisor to President John Mahama.
• The government aims to help the Bank of Ghana restore its balance sheet and perform its functions effectively as the lender of last resort.
• The Bank of Ghana posted an operating loss of GH¢15.6 billion for 2025, with negative equity worsening significantly.

The Ghana government remains resolute in its commitment to maintaining fiscal discipline, a crucial step towards supporting the Bank of Ghana's recovery. Economic advisor to President John Mahama, Seth Terkper, made this assertion on the PM Express Business Edition with host George Wiafe on May 7, 2026.

Terkper emphasized that it is in the government's interest to ensure the Bank of Ghana is in a strong position to perform its functions effectively, particularly as the lender of last resort. He noted that the government has a vested interest in stabilizing the economy, and this can only be achieved by supporting the Bank of Ghana's efforts.

Background on Bank of Ghana's Financial Struggles

The Bank of Ghana has faced significant financial challenges in recent years, with the bank posting an operating loss of GH¢15.6 billion for 2025. This represents a sharp increase from the GH¢9.4 billion loss in 2024, according to the bank's audited financial statements. Negative equity has also worsened significantly, rising from GH¢58.62 billion to GH¢93.82 billion.

The bank's financial struggles can be attributed to several factors, including the cost of monetary policy operations. Open Market Operations rose sharply by about 95% to GH¢16.7 billion, while sterilisation liabilities to commercial banks jumped 186% to GH¢93.6 billion. Money market liabilities also more than doubled to GH¢93.8 billion.

The Domestic Debt Exchange Programme has also contributed to the bank's financial struggles, with returns on government securities dropping significantly. This has led to a sharp decline in interest income, with forgone income estimated to exceed GH¢12 billion.

Concerns Over Pace of Liquidity Mop-up Operations

The Bank of Ghana has come under criticism from the minority in Parliament over the pace of its liquidity mop-up operations. These operations are aimed at helping check inflation through open market operations. However, Terkper maintained that the situation warranted those tough measures.

He noted that there are other countries that have gone through similar routes and have achieved positive results. Terkper emphasized that the government is committed to taking the necessary steps to support the Bank of Ghana's recovery.

Recapitalisation of the Bank of Ghana

The government's recapitalisation programme, as outlined in the Bank of Ghana Amendment Act 1158, aims to strengthen the bank's financial resilience by augmenting its capital base and reducing its sensitivity to short-term income fluctuations.

The Memorandum of Understanding (MOU) signed between the Finance Ministry and the Bank of Ghana on January 6, 2025, outlines the arrangements for the government's support to the bank's recapitalisation efforts. The recapitalisation framework will take effect upon the government implementing a recapitalisation plan that restores the bank's total equity to at least the level of authorised capital, or by December 31, 2032, whichever occurs first.

Looking Ahead

The government's commitment to restoring the Bank of Ghana's fiscal discipline is a positive step towards supporting the bank's recovery. However, the challenges faced by the bank are significant, and the government will need to take sustained efforts to address these challenges.

The Bank of Ghana's financial struggles have far-reaching implications for the economy, and it is essential that the government takes a comprehensive approach to addressing these challenges. This includes implementing the recapitalisation programme, strengthening the bank's financial resilience, and reducing its sensitivity to short-term income fluctuations.