The Institute of Economic Affairs (IEA) has rejected the attribution of a GHS 1.7 billion loss to the Ghana Gold Board (GoldBod) under the Bank of Ghana’s Domestic Gold Purchase Programme. This figure, widely reported, does not represent an actual loss to the institution, according to the IEA.
Professor Alexander Bilson Darku, the Director of Research at the IEA, explained that the reported amount comprises service fees, assaying fees, and foreign-exchange valuation differences. These elements arise from GoldBod’s purchasing and export operations. He clarified that service and assaying fees are payments from the Bank of Ghana (BoG) to GoldBod for services rendered, thus constituting revenue for GoldBod. Professor Darku questioned why revenue would be labelled as a loss.
This clarification comes as Ghana navigates complex economic challenges, including efforts to stabilise the cedi and manage public finances. The alleged loss figure had sparked public debate and calls for scrutiny. Understanding the true nature of these financial transactions is crucial for public confidence and informed policy-making. The IEA’s assessment provides a different perspective on the financial health of a key state entity.
Professor Darku stated that the largest component of the reported GHS 1.7 billion, approximately 90 percent, is an exchange-rate valuation issue. He explained that GoldBod purchases gold for the BoG. The proceeds are then converted from US dollars into cedis using the Central Bank’s reference exchange rate. Differences between the exchange rate at purchase and the rate used for valuation can appear as a loss in the BoG’s books. However, this does not necessarily mean a depletion of national wealth. “It is merely a book accounting issue, and not a significant loss to the nation,” Professor Darku affirmed.
The IEA Director of Research emphasized that transactions between two public institutions should be viewed from a broader government perspective. A cost recorded by one institution can simultaneously be revenue for another. He noted that to the government, the Central Bank might record a loss, while the Gold Board records a gain. These amounts could effectively cancel each other out at the broader government level. This holistic view is essential for accurate financial reporting and public understanding.
Despite clarifying the alleged loss, Professor Darku stressed that GoldBod’s financial operations require careful scrutiny. This is particularly important as the institution transitions from relying on BoG financing to sourcing funds from the private sector. This new financing model, if managed properly, could deepen Ghana’s capital markets. However, it demands transparency, sound financial management, and strong oversight. The move to private sector funding represents a significant shift in GoldBod’s operational strategy.
Professor Darku acknowledged GoldBod’s positive contributions to the economy. These include increased gold exports, foreign-exchange inflows, and reserve accumulation. These factors have supported cedi appreciation and stability. The resulting exchange-rate stability can help reduce import costs, inflation, and interest rates. It also improves Ghana’s debt-to-GDP position and capacity to manage foreign-denominated debt. GoldBod's role in these areas is vital for Ghana's economic resilience.
However, Professor Darku cautioned against excessive reliance on gold for exchange-rate stability and reserve accumulation. He urged the government to pursue broader export promotion, import substitution, and foreign-exchange market regulation. He also called for increased local ownership in key sectors. These measures would create a more diversified and robust economic foundation. The IEA advocates for a balanced approach to economic growth and stability.
Professor Darku commended the government for achieving significant macroeconomic stabilization. He stated that most macro-indicators have moved in the right direction within a relatively short period. The IEA believes the government has done well to achieve reasonable stability. The challenge now is to convert these gains into sustainable growth, employment, and economic transformation. This requires strategic long-term planning and execution.
To achieve lasting economic transformation, Professor Darku called for stronger agricultural investment and employment-led growth. He also advocated for increased local processing of natural resources and reforms to the natural-resource regime. Furthermore, he suggested transforming GoldBod from a gold trader into a strategic asset manager. These recommendations aim to create a more inclusive and prosperous economy for all Ghanaians.
Professor Darku also urged stronger enforcement powers for the Fiscal Council. He called for measures to ensure that reductions in the monetary policy rate translate into lower lending rates for businesses and the private sector. This would stimulate economic activity and support job creation. Effective policy transmission is crucial for the benefits of macroeconomic stability to reach the broader economy.