By Francis Ntow
Accra, Nov. 6, GNA – Reforms to the Bank of Ghana’s liquidity management framework are progressing, the International Monetary Fund (IMF) staff team has observed following the first review of Ghana’s 36-month Policy Coordination Instrument (PCI).
The observation formed part of the IMF’s assessment of Ghana’s structural reforms, including the rollout of the Integrated Tax Administration System, operationalisation of the Fiscal Council and preparation of the Fiscal Risk Statement, all of which the Fund said remained on track.
The liquidity management framework enables the Central Bank to regulate the amount of cedi liquidity in the banking system by absorbing excess cash to curb inflation or injecting funds to prevent shortages and sharp increases in interest rates.
The IMF team, led by Mr Ruben Atoyan, Mission Chief, who visited Accra from October 22 to November 4, said completing the remaining reforms on schedule would support Ghana’s macroeconomic stability and help translate economic gains into jobs and prosperity.
The reforms were carried over from the Extended Credit Facility (ECF) programme approved in May 2023, with more specific targets set during the final ECF review and the 2026 Article IV consultation, paving the way for the PCI.
Among other commitments, the Bank has pledged to introduce a seven-day bill as its main instrument for short-term liquidity management, replacing the 14-day bill to improve operational efficiency.
It has also committed to providing banks with unrestricted end-of-day access to its lending and deposit facilities to stabilise overnight interest rates, as well as publishing clear rules governing its daily monetary operations.
At the 131st Monetary Policy Committee (MPC) press briefing in July, Dr Johnson Pandit Asiama, Governor of the Bank of Ghana, said the transition from the 56-day bill to the 14-day bill had made liquidity management more responsive and flexible.
“While the Bank previously relied on the longer-dated 56-day instrument, it now primarily uses the 14-day bill alongside the overnight facility to manage liquidity conditions,” he said.
He explained that the shorter maturity period allowed for more frequent assessment and adjustment of liquidity, enabling the Bank to respond more effectively to changing market conditions and ensure the efficient transmission of monetary policy.
“The ultimate objective is to manage liquidity in a way that supports the inflation target. To achieve this, liquidity conditions are reviewed on a weekly basis, and the available instruments are adjusted accordingly,” Dr Asiama said.
Meanwhile, Mr Bright Simons, Vice President of IMANI Centre for Policy and Education, in an analysis of the Bank of Ghana’s audited 2025 financial statements, acknowledged the results delivered by the liquidity management framework.
He cited the decline in inflation to 5.4 per cent, an increase in gross international reserves to US$11.9 billion, equivalent to about four months of import cover at the end of 2025, and the cedi’s 40.7 per cent appreciation against the US dollar, one of the strongest performances among emerging-market currencies in 2025.
However, he cautioned that the operating model underpinning the gains was financially unsustainable, leaving the Central Bank with limited capacity to withstand future economic shocks.
Mr Simons attributed the situation to losses arising from the cost of sterilising excess cedi liquidity, which, in turn, generated further losses.
He said the BoG borrowed at interest rates of between 15 and 27 per cent while earning returns of only four to five per cent, adding that revenue from money creation had also declined.
GNA
Edited by Agnes Boye-Doe
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