Gold can’t be Ghana’s only FX lifeline – Gideon Boako calls for broader external-sector strategy

Deputy Ranking Member of Parliament’s Finance Committee and Member of Parliament for Tano North, Dr Gideon Boako

Tano North MP Dr Gideon Boako has called attention to the need for Ghana to look beyond gold as it seeks to strengthen the cedi, accumulate international reserves and build greater resilience against external shocks.

Dr Boako made the observation in a detailed write-up issued on Sunday, September 27, in which he examined Ghana’s changing external-sector architecture and the growing role of gold in the country’s foreign-exchange strategy.

He noted that the Domestic Gold Purchase Programme had enabled Ghana to purchase domestically produced gold in cedis and subsequently convert the gold into foreign exchange or reserves.

According to him, gold has become an increasingly important component of Ghana’s foreign-exchange and reserve strategy, particularly following the transfer of domestic gold-purchasing responsibilities to GoldBod.

However, he cautioned that an external position heavily dependent on gold remained exposed to international gold prices, production volumes, export arrangements and the availability and cost of financing.

“Reserve accumulation asks: How many dollars does Ghana have? External resilience asks: How reliably can Ghana generate dollars when conditions deteriorate?” Dr Boako stated in the write-up.

He therefore argued that Ghana needs a broader external-sector strategy involving manufacturing, agriculture and agro-processing, tourism, digital services, traditional exports, remittances and other internationally competitive services.

Dr Boako said gold could strengthen Ghana’s balance sheet and provide a reserve anchor, but could not by itself diversify the productive structure of the economy.

He said the ultimate objective should be to build an economy capable of generating foreign exchange from multiple sources, maintaining adequate reserves and absorbing external shocks without repeatedly placing extraordinary pressure on either the Bank of Ghana or the sovereign balance sheet.

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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.