Ghana: Balancing Stabilization Costs with Revenue Opportunities
Ghana’s recent economic stabilization has been achieved through aggressive policy intervention, a process that both Professor Ebo Turkson of the Bank of Ghana’s Monetary Policy Committee (MPC) and Governor Johnson Pandit Asiama have acknowledged comes with considerable financial costs that must be rigorously assessed against the resulting benefits.
The Cost of Price Stability
Speaking on TV3’s Key Points programme, Professor Turkson emphasized the economic imperative of considering trade-offs: “We should always have a discussion relative to the benefits of the cost; every economic policy comes with a cost. Price stability comes at a cost.”
The decline in inflation—which dropped dramatically to 3.2 per cent by March 2026, marking fifteen consecutive monthly drops—was primarily attributed to the central bank’s aggressive absorption of excess market liquidity. Governor Asiama, during a meeting with the Council of State on April 23, confirmed that the financial results for 2025 would reflect these stabilization costs. Key factors driving these expenses include:
- Domestic Debt Exchange Programme (DDEP): This initiative has reduced income streams from government securities, a financial impact expected to extend beyond 2025.
- Open Market Operations (OMOs): The central bank’s liquidity absorption efforts, crucial for curbing inflation, incurred significant interest costs.
- Gold Purchase Programme (GANRAP): While strategically beneficial, the programme incurs structural costs, including those arising from exchange rate differences between the gold market rate and the interbank rate used for Bank of Ghana accounting.
Furthermore, the 41 per cent appreciation of the cedi in 2025, a positive outcome, simultaneously created valuation effects on the Bank’s foreign currency assets. Governor Asiama stressed that these accounting factors do not compromise the Bank’s ability to fulfill its core mandate.
Leveraging Commodity Trends for Revenue
Alongside stabilization efforts, Prof. Turkson advocated for a strategic focus on capitalizing on favorable global commodity prices, specifically gold, to bolster national revenue. He endorsed the continuation of the Bank of Ghana’s gold purchase programme (now transitioned to GANRAP) but advised prudent risk management: “If gold is doing well, why shouldn’t Ghana take advantage of it. We should just take care we don’t put too much of our assets in gold so that when the gold prices go down, we don’t suffer.”
Significant Gains from 2025 Stabilization
The policy response initiated in 2025—which involved monetary tightening, OMOs, reserve rebuilding via the gold programme, and banking sector reforms—yielded significant economic improvements, transforming the challenging environment Ghana faced at the beginning of the year (inflation above 23 per cent, weakened cedi, and four months of import cover in reserves).
| Economic Indicator | Entry Point (2025) | Result (March 2026) |
|---|---|---|
| Inflation Rate | Above 23% | 3.2% |
| Foreign Reserves | ~4 months of imports | US$14.5 billion (Historic High) |
| Cedi Valuation | Weakened | ~41% Appreciation (2025) |
| GDP Growth Rate | N/A | 6.0% |
The banking sector also emerged stronger, better capitalized, and capable of extending greater credit to support overall economic activity.
Outlook for 2026
Despite the significant domestic gains, Governor Asiama noted that the global economic environment for 2026 is increasingly uncertain, highlighted by oil prices rising above US$100 per barrel.
He asserted, however, that Ghana is positioned to weather this uncertainty with “stronger economic buffers than in recent history.” The central bank’s strategic focus for 2026 will be on:
- Improving credit quality.
- Strengthening banking governance.
- Supporting export finance.
- Sustaining the stabilization gains achieved in 2025.
