BOG liquidity management costs ease slightly, but remain high at GH¢17b

The cost of the Bank of Ghana’s (BoG) liquidity management operations has shown signs of easing, though it remains significantly elevated, totalling approximately GH¢17 billion, according to reports.

Data monitored by the business news outlet thebftonline indicates a marginal decline in the expenses associated with the central bank’s efforts to mop up excess liquidity from the financial system. While the reduction offers a slight reprieve, the figures underscore the persistent monetary policy challenges facing the economy under the stewardship of Governor Dr. Johnson Asiama.

The high cost of sterilization—the process of withdrawing excess money supply to control inflation—reflects the delicate balancing act the Monetary Policy Committee (MPC) must perform. Elevated mopping-up costs can strain the central bank’s balance sheet and signal underlying inflationary pressures within the economy.

This development comes amid a series of significant policy shifts and strategic decisions by the BoG. Recent actions have included the diversification of the country’s gold reserves, a strategic rebalancing intended to bolster the nation’s financial stability and hedge against global economic shocks. The central bank has also moved to broaden its regulatory oversight, expanding its credit reporting net to include telecommunications companies, retailers, and FinTechs—a step aimed at deepening financial inclusion and credit assessment.

However, these policy maneuvers have not been without scrutiny. The BoG has faced external pressure for greater transparency, highlighted by an RTI (Right to Information) request filed by the Accountability Public Library (APL) concerning the details of the central bank’s gold divestment strategy.

Furthermore, the MPC’s future policy decisions are likely to be complicated by external factors. Analysts suggest that surging global crude prices could feed into domestic inflation, potentially influencing the committee’s deliberations in the coming months and putting further pressure on the central bank’s sterilization efforts.

The GH¢17 billion figure serves as a critical indicator for economists and market watchers, signaling that while the central bank may be gaining some ground, the battle against liquidity and its associated costs is far from over.