The Bank of Ghana (BoG) has reaffirmed its dedication to implementing policies aimed at maintaining stable inflation levels, aligned with its medium-term target of 8 percent.
Despite reporting a GH¢10.5 billion loss for 2023, the central bank remains focused on its mandate of ensuring price stability.
Director of Communications, Bernard Otabil, emphasized in a statement that reducing inflation to the target level is essential for achieving sustainable economic growth and ensuring long-term economic prosperity in Ghana.
“Achieving low and stable inflation helps to promote exchange rate stability under a floating currency regime,” Mr. Otabil said.
The BoG’s financial statements for 2023 revealed that total operating income surged by 47.3 percent to GH¢8.80 billion, primarily driven by interest from investments in overseas securities and bonds, penalties imposed on institutions for regulatory violations, and various fees and charges.
However, the bank also faced substantial expenses, with the cost of open market operations soaring more than fivefold to GH¢8.3 billion, compared to GH¢1.7 billion in 2022.
Mr. Otabil clarified that the increased costs associated with open market operations were essential to absorb excess liquidity in the economy and support the process of reducing inflation.
“Reducing inflation by over 30 percentage points, the Bank of Ghana incurred GH¢8.3billion costs on open market operations,” he said.
“Central bank actions are socially beneficial actions, and that is the special character of central banks. Central banks can make losses, get into negative accounting equity and function completely successfully. Therefore, central banks are not expected to compromise policy objective to report handsome profit.”
Despite the losses incurred, BoG’s vigorous liquidity absorption efforts helped reduce inflation to 23.2 percent by the end of 2023, a significant drop from 54.1 percent at the end of 2022.
Mr. Otabil stressed that a financial loss does not indicate a loss of policy effectiveness and stated that the bank’s decisive measures to curb inflation reinforce its credibility and dedication to its mission.
“Our strong actions to control inflation reinforce our credibility and commitment to our mission. Showing that we can effectively manage inflation boosts confidence both domestically and internationally. This trust is vital for attracting foreign investment and maintaining favourable trade conditions,” Mr. Otabil said.
“The 2023 financial statements demonstrate our unwavering commitment to our price stability mandate and the well-being of all Ghanaians,” the Director insisted.
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