A GNA feature by Issah Mohammed/Jibril Abdul Mumuni
Accra, May 11, GNA – Ghana’s Central Bank’s recapitalisation has become a key topic for discussion in the build-up to the country’s mid-year budget review scheduled for July.
In the 2025 financial statement, the central bank’s auditors, KPMG, acknowledged its negative equity position, reporting losses in excess of GHS15 billion for the financial year.
The central bank’s negative equity position, prompting recapitalisation, presently stands at GHS93.82 billion, compared with GHS 58.62 billion in 2024.
The negative equity state of the central bank means that its liabilities exceed its assets.
Unlike a commercial bank, the Bank of Ghana can still operate under these circumstances.
However, it undermines credibility and policy effectiveness since it is also a regulator of financial institutions, as institutions under it expect best practices from it.
Calls for the recapitalisation of the central bank began after it suffered a major setback due to the Government’s Domestic Debt Exchange Programme (DDEP), which has pushed the bank into a negative equity position since 2022.
The DDEP worsened the equity position of the central bank through direct haircuts and mark-to-market losses.
Under the DDEP, the BoG, a major holder of Ghana’s sovereign debt, traded its government bonds for new ones that paid much less interest and took a longer time to repay.
This reduced the central bank’s assets by 50 per cent, resulting in a negative equity of GHS 60 billion in 2022.
The central bank’s equity also took a hit through direct loans and overdrafts extended to the Government during the COVID-19 pandemic.
Amid the ongoing debate on recapitalisation is the cost to the taxpayer.
The attempt to recapitalise the central bank is a fiscal cost, as the Ministry of Finance would have to explore avenues to undertake this exercise.
Whether through borrowing or other fiscal means, every decision to that effect will either increase public debt levels or force government to increase taxes, which could place pressure on the national budget.
Although there is consensus that the central bank requires urgent recapitalisation, there are differing views on how this should be undertaken.
The Bank of Ghana is not an exception within the global central banking landscape to have undercook a recapitalisation programme.
Other central banks, including those of England, Chile, and the Philippines, had all undergone recapitalisation efforts.
In Ghana’s case, varying opinions on the recapitalisation strategy have emerged since the issue was disclosed in the central bank’s financial statements in 2024.
According to the 2025 financial statement, plans are far advanced to ensure that the recapitalisation is carried out prudently.
The financial statement noted that the central bank had initiated formal discussions with the Ministry of Finance on a structured recapitalisation programme.
The approach is a phased capital injection, structured as non-tradable, zero-coupon bonds, to avoid generating new interest expense obligations.
On 6th January 2025, the Ministry of Finance signed a Memorandum of Understanding (MoU) with the Bank of Ghana on how the Government intended to support the reversal of the negative equity position of the Bank.
However, Madam Abena Osei-Asare, Member of Parliament for Atewa East, called for a transparent recapitalisation of the central bank.
In a media statement cited by the Ghana News Agency, the former Deputy Minister of Finance said the public deserved to know the full details of the recapitalisation arrangement, including how much it would cost and how it would affect the national budget.
She stressed that any effort to use public funds to support the central bank must receive parliamentary approval and be clearly explained to the citizens.
Madam Osei-Asare said although the Bank of Ghana could still operate despite its negative equity, the problem would eventually affect taxpayers through future budget pressures.
Dr Mohammed Amin Adam, the former Finance Minister and Ranking Member on Parliament’s Finance Committee, in a petition to the International Monetary Fund (IMF) Ghana Mission Chief, touching on the Bank of Ghana’s audited 2025 financial statements, warned of what he described as “material implications” for Ghana’s macroeconomic stability and fiscal outlook.
He urged the Fund to pay closer attention to safeguarding gains made under the Extended Credit Facility programme with Ghana, stressing that “greater attention is paid to safeguarding the durability of these gains” as Ghana exits the programme.
Mr Isaac Adongo, Member of Parliament for Bolgatanga Central and Ranking Member on the Finance Committee of Parliament, said the recapitalisation of the central bank was a deferred fiscal cost, stressing that it was not free.
The MP blamed the former government for a lack of commitment to ensuring the recapitalisation of the bank.
He said the previous regime left office without any recapitalisation programme for the Bank of Ghana.
The central bank has maintained that the figures recorded in its financial statement was the financial reflecton of policy operations.
“They do not represent a cash loss, a depleton of reserves, nor a sign of insttutonal distress,” it said.
“Negatve equity is a cumulatve positon carried over from prior years and deepened in 2025; it does not impair the Bank’s capacity to conduct monetary policy.”
GNA
Edited by Agnes Boye-Doe
Reporters: Issah Mohammed, Jibril Abdul Mumuni