Bank of Ghana Advances Liquidity Management Reforms

The International Monetary Fund (IMF) staff team has observed progress in the Bank of Ghana's liquidity management reforms during the first review of Ghana's 36-month Policy Coordination Instrument (PCI). The reforms aim to enhance the Central Bank's ability to regulate cedi liquidity in the banking system. This involves absorbing excess cash to curb inflation or injecting funds to prevent shortages and sharp increases in interest rates. The IMF team, led by Mr. Ruben Atoyan, visited Accra from October 22 to November 4.

The liquidity management framework is crucial for macroeconomic stability and translating economic gains into jobs and prosperity. Completing the remaining reforms on schedule will support Ghana's economic stability. The reforms were carried over from the Extended Credit Facility (ECF) programme approved in May 2023. The Bank of Ghana has pledged to introduce a seven-day bill as its main instrument for short-term liquidity management, replacing the 14-day bill to improve operational efficiency.

The Bank of Ghana has also committed to providing banks with unrestricted end-of-day access to its lending and deposit facilities to stabilise overnight interest rates. Additionally, it will publish clear rules governing its daily monetary operations. These reforms aim to improve the Central Bank's ability to manage liquidity conditions effectively. The transition from the 56-day bill to the 14-day bill has made liquidity management more responsive and flexible, according to Dr. Johnson Pandit Asiama, Governor of the Bank of Ghana.

Dr. Asiama explained that the shorter maturity period allows for more frequent assessment and adjustment of liquidity. This enables the Bank to respond more effectively to changing market conditions and ensure the efficient transmission of monetary policy. The ultimate objective is to manage liquidity in a way that supports the inflation target. To achieve this, liquidity conditions are reviewed on a weekly basis, and the available instruments are adjusted accordingly.

Mr. Bright Simons, Vice President of IMANI Centre for Policy and Education, acknowledged the results delivered by the liquidity management framework. He cited the decline in inflation to 5.4 per cent and an increase in gross international reserves to US$11.9 billion. The cedi's 40.7 per cent appreciation against the US dollar was one of the strongest performances among emerging-market currencies in 2025.

However, Mr. Simons cautioned that the operating model underpinning the gains was financially unsustainable. He attributed the situation to losses arising from the cost of sterilising excess cedi liquidity, which generated further losses. The Bank of Ghana borrowed at interest rates of between 15 and 27 per cent while earning returns of only four to five per cent.

The IMF staff team's observation highlights the progress made in implementing the liquidity management reforms. The reforms are crucial for maintaining macroeconomic stability and supporting economic growth. The Bank of Ghana's efforts to improve its liquidity management framework will continue to be monitored by the IMF under the PCI.

Key points

• The Bank of Ghana is introducing a seven-day bill as its main instrument for short-term liquidity management.
• The liquidity management reforms aim to enhance the Central Bank's ability to regulate cedi liquidity in the banking system.
• The reforms are crucial for maintaining macroeconomic stability and supporting economic growth.