At a time when Ghana’s economic direction is under intense scrutiny, one misconception continues to surface: that the central bank should be judged by its profitability.
This view does not just miss the point but also misunderstands how modern economies survive.
The primary mandate of the Bank of Ghana is not to make profits. It is to maintain price stability, protect the currency, and create conditions for sustainable economic growth. In today’s environment, fulfilling that mandate requires difficult trade-offs and in many cases, intentional financial sacrifice.
The Real Mandate: Stability First
Central banking, by design, is about economic balance, not commercial returns.
The Bank of Ghana is tasked with:
- Curbing inflation
- Stabilizing the cedi
- Ensuring liquidity in the financial system
- Enabling interest rates that support business growth
These goals often conflict with profit-making.
And in Ghana’s current economic context, they do so sharply.
Why Profitability Is Not the Objective
To control inflation and stabilize the economy, the central bank must actively intervene in ways that naturally reduce its own earnings.
- Managing Inflation Through FX Intervention
To reduce imported inflation, the central bank supplies foreign exchange to the market. This helps:
.Stabilize the currency
.Reduce price pressures
But it also:
.Depletes reserves
.Limits opportunities for high-yield reserve investments
In simple terms; you are left with a choice to either defend the cedi or chase profits. You cannot do both at the same time.
Yet critics who demand profitability are in effect asking the central bank to step back from defending the currency, a position that would quickly translate into higher inflation and weaker cedi.
- Strengthening Reserves Through Gold Purchases
The push to buy gold locally at competitive prices is a strategic move to:
.Build long-term reserves
.Reduce smuggling
.Anchor monetary stability
However:
.Gold purchases require significant liquidity upfront
.They generate limited immediate income
- Lowering Interest Rates to Support Growth
The reduction in Treasury bill rates from crisis highs of 27% to around 5% is not a weakness. It is a policy signal.
It reflects:
.Lower inflation expectations
.A shift toward supporting businesses and investment
Lower rates mean:
.Cheaper borrowing for government and private sector
.Increased economic activity
But also:
.Reduced income for the central bank
The uncomfortable truth here is that: if you want businesses to grow, the central bank must earn less. There is no two ways about this.
The Core Reality
There is no scenario where a central bank can:
.Sell FX to stabilize the currency
.Buy gold at attractive prices to secure reserves
.Lower interest rates to stimulate growth
…and still expect to generate strong financial margins, especially when Treasury yields are at 5%.
These are deliberate policy sacrifices — not financial inefficiencies and certainly not policy failures.
Anyone arguing otherwise is either ignoring basic economics or prioritizing optics over outcomes.
A Necessary Trade-Off
Ghana’s current policy stance reflects a conscious choice:
.Prioritize macroeconomic stability over institutional profitability
This is not just the correct choice, it is the only responsible choice for us.
Because the cost of instability is far greater:
.High inflation erodes incomes
.Currency volatility discourages investment
.High interest rates stifle business growth
In contrast, a stable environment:
.Encourages private sector expansion
.Supports job creation
.Builds long-term economic confidence
The real danger is not lower central bank profit but the economic instability disguised as financial performance.
The Role of Interest Rates in Growth
Bringing Treasury bill rates down is critical for:
.Lowering the cost of capital
.Supporting SMEs and industrial growth
.Enabling long-term investment planning
A high-interest-rate environment may benefit financial returns in the short term, but it:
.Crowds out private sector borrowing
.Slows down production
.Limits economic expansion
The shift toward lower rates is therefore pro-growth, even if it reduces central bank earnings.
Beyond Monetary Policy
What this moment highlights is not a failure of central banking, but the limits of monetary policy alone.
The central bank can:
.Stabilize
.Support
.Enable
But it cannot replace:
.Production
.Exports
.Industrial expansion
Expecting the Bank of Ghana to fix structural economic weaknesses while also turning a profit is not just unrealistic but also it is economically irresponsible.
Conclusion: Stability Is the True Return
The Bank of Ghana’s actions must be viewed through the lens of national economic stability, not profit and loss.
A central bank that successfully controls inflation, stabilizes the currency, and enables growth is already delivering its highest return.
In Ghana’s current phase, sacrifices are not optional, they are necessary.
And with Treasury bill rates at historic lows, it is clear that:
- You cannot demand stability, growth, and intervention and still expect profits.
- The real measure of success is not the central bank’s balance sheet.
It is the strength, resilience, and productivity of the Ghanaian economy and any serious observer should judge it accordingly.
