Foreign reserves are being built, not burning them – BoG Governor clarifies at IMF Meetings

Claims have been dismissed by Dr Johnson Asiama Pandit, the Governor of the Bank of Ghana, that the central bank is reducing the foreign reserves of Ghana through market operations.

Dr Johnson Asiama Pandit insisted during an interview with the IMF in the course of the IMF/World Bank Spring Meetings in Washington DC on October 16, that the Bank of Ghana is restoring the foreign reserves not burning them.

He said that “Yes, there were allegations about whether we’re intervening in the market. But that was not exactly the case.”

He clarified that what was believed to be heavy central bank activity between the respective periods of 2025 was because of  “lumpy payments” that had to be cleared during that period.

He described that “Between the second and the third quarter, we had to do a number of lumpy payments. There were all these large arrears in payments to some of the IPPs. These were billions  of US dollars.”

In addition, he said that the Bank of Ghana also had to fulfill commitments to some local debt exchange bondholders who decided to exit their investments when the cedi appreciated.

He stated that “Some bondholders felt that, because the currency had appreciated, it was the right time to take up their investment. We had to allow them to go. So we did a lot of lumpy payments between July and August.”

As per  Dr Johnson Asiama Pandit, those payments created a temporary impression that the Bank was taking strong actions in the market but that was not the case.

He explained that the central bank needed to take actions in the market during a period when over US$6 billion money transfers from abroad which was injected year into the economy declined.

He noted that “Immediately after the currency appreciated, we saw a decline in remittance inflows. So, in the mix of that, the central bank needed to step in to meet all those lumpy payments. The interbank FX market had dried up during that time, and so the central bank needed to provide that support.”

Dr Johnson Asiama Pandit drew to attention that this kind of situation has considerably improved.

Dr Johnson Asiama Pandit highlighted that “The Interbank FX market has come back. We have written to the mining firms, for example, to take all their inflows through the commercial banks. So we are beginning to see some pickup in activity in the interbank FX market.”

He made a clarification that with higher inflows through the commercial banks. The role of the central bank in the market will reduce while  foreign reserves are restored.

READ: State-Owned Enterprises record GH¢9.68 billion loss in 2024 — SIGA report