News Guide Africa

Tag: Open Market Operations (OMO)

  • BoG transforms economy amid GH¢15.6bn “Stabilization Cost”

    BoG transforms economy amid GH¢15.6bn “Stabilization Cost”

    By Adnan Adams Mohammed

    The Bank of Ghana (BoG) has released its 2025 annual financial statements, detailing a net loss of GH¢15.6 billion.

    While the figure represents an increase from the GH¢9.4 billion loss recorded in 2024, central bank officials characterize the result as the “audited cost of restoring price stability” a price paid to pull the national economy back from the brink of collapse.

    In a press briefing following the release, the Bank emphasized that its performance must be judged by its statutory mandate to maintain price and financial stability, rather than by the profit-making standards of commercial companies.

    The anatomy of a recovery

    The 2025 financial results reflect a year of aggressive intervention. Three core policy drivers accounted for the headline costs:

    Crushing Inflation: The Bank spent GHc16.7 billion on Open Market Operations (OMO) to absorb excess liquidity. This intervention successfully drove inflation down from a peak of 54.1% to 3.2% by March 2026, marking 15 consecutive months of decline.

    Building Record Reserves: The Bank’s gold purchase programme accumulated approximately 111 tonnes of gold in 2025, up from less than a tonne in 2021. This helped push total international reserves to US$14.5 billion by February 2026 the highest in Ghana’s history. The accounting cost of this scale-up was GHc9 billion.

    Cedi Appreciation: In a dramatic reversal of prior years, the cedi gained 41% in value in 2025, becoming the strongest emerging market currency in the world that year. However, this strength triggered a non-cash accounting charge of GHc19.32 billion, as the cedi value of the Bank’s foreign-denominated holdings decreased on the books.

    The “DDEP” legacy and negative equity

    The Bank addressed its cumulative negative equity position of GHc96.3 billion, tracing its origins to the 2022 Domestic Debt Exchange Programme (DDEP).

    The DDEP, a national strategy to restore debt sustainability following years of economic distress, involved a 50% “haircut” on the Bank’s holdings of government debt. This restructuring continues to affect the Bank’s financials, reducing its annual interest income by approximately GHc13 billion.

    Normalizing the loss

    Central bank officials noted that Ghana is not an outlier in this regard. The European Central Bank and the U.S. Federal Reserve have both reported significant losses in recent years while fighting global inflationary pressures.

    “The Bank’s authority comes from law, not from its balance sheet,” the briefing noted, reassuring the public that the results do not affect the BoG’s ability to implement monetary policy or supervise the financial system.

    Looking ahead: Why the trend will shift

    The Bank projects that the 2025 result represents a peak. Four factors are expected to improve the financial outlook for 2026 and beyond:

    Lower Liquidity Costs: With inflation at 3.2%, the large “monetary overhang” has been cleared, reducing the cost of OMO operations.

    Rate Reductions: The policy rate cut from 27% to 14% means new liquidity operations cost roughly half what they did a year ago.

    GANRAP Implementation: The new Ghana Accelerated National Reserve Accumulation Policy (GANRAP) will shift the financing structure of gold purchases, moving the accounting impact off the Bank’s books.

    Cedi Stability: With the currency expected to remain stable at its new stronger level, the massive revaluation charges seen in 2025 are unlikely to recur.

    “The financial results reflect the mechanics of stabilizing an economy that was under significant stress,” the Bank concluded. “Every cost has a name, an economic explanation, and an outcome that benefited ordinary Ghanaians”.

     

     

     

  • Investors diversifying away from T bills

    Investors diversifying away from T bills

    By Toma Imirhe

    Early signals are emerging of a gradual but notable rebalancing of investment portfolios within Ghana’s fixed income market, as some institutional and high-net-worth investors begin to shift funds away from short-term Treasury bills into a mix of central bank Open Market Operations (OMO) instruments, bank deposits, and equities.

    The move, while still tentative, reflects changing yield dynamics and liquidity preferences following the Bank of Ghana’s monetary easing cycle and the sharp decline in short-term interest rates.

    Recent auction data shows a sustained drop in Treasury bill yields across the curve. The 91-day bill rate had fallen to about 4.91%, while the 182-day and 364-day instruments were offering roughly 6.78% and 9.98% respectively as of mid-April 2026.

    This marks a significant decline from levels above 10% earlier in the year and over 11% at the end of 2025, reflecting both easing inflation and the impact of the policy rate cuts.

    Despite these lower yields, Treasury bills continued to attract strong nominal demand, although recent auctions recorded under-subscription rates forcing a slight uptake in the interest rates they offer.

    “Demand is still strong, but it is becoming more selective,” said a fixed income strategist at a leading Accra-based asset management firm. “Investors are increasingly unwilling to lock in funds at current short-term yields when alternative instruments offer either better returns or comparable returns with more flexibility.”

    One leg of the emerging rebalancing is towards the Bank of Ghana’s Open Market Operations (OMO) instruments and longer-dated government bonds.

    OMO bills used by the central bank to manage liquidity have become more attractive to banks and institutional investors seeking short-term placements with competitive rates and -with 14 days tenor – lower duration risk.

    At the same time, some investors are extending duration into medium- to long-term bonds on the secondary market, to lock in yields ahead of a potential further decline in interest rates. With government having resumed medium term bond issuances with a seven year bond recently, this window of opportunity is widening.

    “With the yield curve expected to compress further, there is a clear incentive to move into longer tenors now,” notes an Accra-based bond market analyst. “The opportunity cost of staying in 91-day bills is rising.”

    A second stream of reallocation is flowing into bank deposits and near-cash instruments.

    Commercial banks, adjusting to the lower monetary policy rate, have begun tweaking deposit offerings to retain liquidity, particularly from corporate clients. While deposit rates remain below historical T-bill yields, they are increasingly competitive on a risk-adjusted basis.

    For conservative investors, especially corporates managing working capital, the appeal lies in liquidity and capital preservation.

    “Some clients prefer to keep funds in high-quality bank deposits or money market funds where they can access liquidity quickly,” said a treasury manager at a tier-one Ghanaian bank. “The marginal yield superiority of T-bills is no longer enough to justify being locked into them.”

    Perhaps the most notable, albeit still limited, shift is towards equities.

    The Ghana Stock Exchange has posted strong returns in recent months, driven by banking sector recovery following the Domestic Debt Exchange Programme and improved macroeconomic stability.

    “Equities are beginning to look attractive again, particularly bank stocks which are showing strong earnings rebounds,” says an equity analyst at a local brokerage. “We are seeing some rotation from fixed income into equities, but it is still modest.”

    Market participants say the shift into equities is being constrained by several factors.

    First, risk appetite remains cautious after recent macroeconomic shocks. Second, liquidity on the stock market is relatively thin compared to the fixed income market. Third, many institutional investors face mandate restrictions that limit equity exposure.

    “There is interest, but not a wholesale shift,” the analyst adds. “Investors are dipping their toes in the water, rather than actually diving in.

    Taken together, these trends point to an emerging three-way portfolio rebalancing One is reduced incremental allocations to short-term T-bills due to falling yields; another is increased placements in OMO instruments and longer-dated bonds; and the third is diversification into bank deposits and a gradual tilt towards equities

    This is not yet a wholesale exit from government securities, but rather a reallocation within and beyond the fixed income space.

    Looking ahead, analysts believe equities could attract a larger share of investment flows though if current conditions persist.

    Key triggers would include continued macroeconomic stability, sustained earnings growth by listed companies especially banks and further declines in fixed income yields.

    “If T-bill rates remain below 5% at the short end, the relative attractiveness of equities will improve significantly,” asserts the asset manager. “But it will take time for confidence to fully return.”

    For now, the rebalancing remains gradual and segmented, driven by differing risk appetites and liquidity needs. But the direction is becoming clearer: Ghana’s investment landscape is slowly shifting from a T-bill-dominated market to a more diversified allocation across asset classes.