By D.I. Laary
Accra, May 14, GNA – Losses recorded by the Bank of Ghana (BoG) reflect policy intervention costs and international accounting rules rather than institutional insolvency, Chartered Accountant Francis Abudu Zimmaleh has stated, urging political actors to stop weaponising the central bank’s financial statements.
He noted that public debate surrounding the BoG’s reported losses had become heavily politicised, often overlooking the technical realities of central banking operations, debt restructuring, and foreign exchange accounting treatments.
“Central bank losses are not inherently signs of failure or mismanagement. They are often the accounting outcome of policy actions taken during periods of economic stress,” Mr Zimmaleh said in an interview with the Ghana News Agency on Thursday during an analysis of Ghana’s monetary and financial reporting framework.
He explained that the substantial losses reported by the central bank between 2022 and 2025 were largely driven by the Domestic Debt Exchange Programme (DDEP), exchange rate revaluations, and the costs associated with inflation-fighting monetary policies.
Under International Financial Reporting Standards (IFRS), particularly International Accounting Standard (IAS) 21, movements in exchange rates can generate accounting gains or losses on foreign reserves, even when those assets are not sold.
“For a central bank, if the cedi strengthens against the dollar, the cedi value of foreign reserves declines on paper. That accounting adjustment becomes a reported loss,” he explained.
Mr Zimmaleh, who is also a business consultant with expertise in financial reporting, corporate strategy, and public financial management, said the DDEP significantly impacted the central bank because it held restructured government bonds that lost value during the exercise.
He further noted that the BoG incurred substantial costs through high interest payments on liquidity management operations introduced to curb inflation and stabilise the economy.
According to him, these developments pushed the central bank into a negative equity position, where liabilities exceeded assets on paper.
“For a commercial bank, negative equity would likely mean collapse. But a central bank operates differently because it has sovereign backing and monetary authority,” he added.
Mr Zimmaleh also addressed the debate surrounding differences between profit-and-loss reporting and Other Comprehensive Income (OCI) treatment under the BoG Act.
He explained that some exchange-related valuation changes on gold reserves, Special Drawing Rights (SDRs), and foreign securities were recorded under OCI rather than in the main income statement.
“Critics argue that this softens the reported losses, while the Bank maintains it is applying provisions permitted under its governing law,” he said.
He further examined the impact of the Domestic Gold Purchase Programme (DGPP) and operations involving the Ghana Gold Board.
Under the programme, the central bank purchased gold from small-scale miners at market-based exchange rates but recorded the assets at the official exchange rate, thereby creating accounting losses under IAS 21.
“It is important to understand that these were policy-driven costs aimed at building reserves and reducing gold smuggling, not speculative trading losses,” Mr Zimmaleh said.
According to him, cumulative losses linked to the gold purchase programme between 2022 and 2024 exceeded GHS7 billion.
The BoG later reported a net loss of GHS15.63 billion in 2025, while negative equity widened to GHS93.82 billion.
He noted that disagreements subsequently emerged over whether broader OCI adjustments should be included as part of the effective loss position.
While government officials and GoldBod described the operational loss as GHS15.6 billion, opposition figures argued that total equity losses exceeded GHS34.9 billion after incorporating non-cash OCI adjustments.
Mr Zimmaleh said the International Monetary Fund (IMF) had identified quasi-fiscal losses of approximately US$214 million linked to the gold operations, but clarified that these costs reflected state intervention policies rather than institutional mismanagement.
“The IMF indicated that such policy costs are better carried through the national budget instead of the central bank’s balance sheet,” he noted.
Despite the accounting losses, the programme contributed to Ghana’s international reserves rising to approximately US$13.8 billion, equivalent to about 5.7 months of import cover, while GoldBod generated an estimated US$3.8 billion in foreign exchange inflows.
He stated that from January 2026, the BoG exited direct gold trading activities, leaving GoldBod responsible for gold purchases, assaying, and exports.
“The restructuring allows the central bank to concentrate on monetary policy and reserve management while reducing future accounting distortions linked to gold trading,” he said.
Mr Zimmaleh stressed that central banks differ fundamentally from commercial institutions because they possess monetary issuance powers and sovereign support.
“A central bank cannot be liquidated like an ordinary bank. The real concern is whether public confidence in the currency and monetary authority remains intact,” he said.
He cautioned political parties against selectively interpreting central bank losses to advance partisan narratives.
“The ruling side often downplays the figures as technical accounting adjustments, while the opposition amplifies them as proof of economic collapse. Both approaches oversimplify a complex policy issue,” he stated.
Mr Zimmaleh urged policymakers, journalists, and the public to focus instead on whether the BoG had achieved its core policy objectives, including inflation control, exchange rate stability, financial sector resilience, and reserve adequacy.
“The Bank of Ghana’s mandate is not profit maximisation. Its primary responsibility is maintaining price stability and confidence in the financial system,” he emphasised.
He also called for clearer disclosure standards, stronger public financial education, and independent technical reviews of central bank reporting to improve transparency and reduce misinformation.
“Trust in central banking depends on transparency, credibility, and informed public understanding, not political rhetoric built around accounting headlines,” Mr Zimmaleh added.
GNA
Edited by Audrey Dekalu
Reporter: D.I. Laary
Email: [email protected]