By Francis Kobena Tandoh
Flagbearer of the opposition New Patriotic Party (NPP) and former Vice President Dr. Mahamudu Bawumia on Friday defended Ghana’s Gold-for-Reserves programme introduced during the Nana Addo Dankwa Akufo-Addo-led administration.
According to him, the policy was an unconventional but necessary response to the country’s foreign exchange crisis during the economic difficulties that followed the Russia-Ukraine war.
Speaking at a public event, Dr. Bawumia said Ghana had traditionally relied on international capital markets to raise about US$3 billion annually, but lost access to those markets during the crisis.
The development, he emphasized intensified pressure on the cedi hence forced policymakers to explore alternative ways of building foreign-exchange reserves.
The former Vice President said Ghana’s position as one of the world’s leading gold producers provided an opportunity to buy locally produced gold with cedis rather than using scarce dollars to purchase gold on international markets.
Bawumia noted that Ghana held only about 8.7 tonnes of gold reserves in 2021, a situation he considered unacceptable for Africa’s leading gold producer.
According to him, the programme subsequently enabled Ghana to accumulate significant gold reserves and strengthened the Bank of Ghana’s capacity to intervene in the foreign-exchange market.
However, the programme has also faced criticism over its financial costs. The International Monetary Fund’s (IMF’s) latest assessment says the Domestic Gold Purchase Programme (DGPP) helped rebuild reserves and support forex-market stabilisation, but also generated sizable losses and quasi-fiscal risks.
Bawumia maintains that the policy was an example of “out-of-the-box thinking” developed to address an extraordinary economic crisis. Enditem
Source: Ghana Eye Report
