Why BoG Seeks Stability First and Not Profit

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:

1. Curbing inflation

2. Stabilising the cedi

3. Ensuring liquidity in the financial system

4. 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.

1. 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.

2. 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

3. 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:

Prioritise 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:

Stabilise

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:

1. You cannot demand stability, growth, and intervention and still expect profits.

2. 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.