The Bank of Ghana (BoG) has justified the rising costs associated with its Domestic Gold Purchase Programme, describing them as necessary trade-offs to stabilise the economy during periods of severe macroeconomic shocks.
Speaking on the KeyPoints with Alfred Ocansey, Head of Gold Management at the central bank, Paul Bleboo, says the initiative was introduced in response to a series of external and domestic pressures that hit Ghana between 2020 and 2022.
According to him, the COVID-19 pandemic, the Russia-Ukraine war, and concerns about Ghana’s debt sustainability significantly disrupted the country’s access to international capital markets while tightening domestic financing conditions.
“As a result, we saw our reserves decline sharply, inflation rise, and the cedi depreciate significantly,” he explained on May 2.
To address the situation, the BoG launched the Domestic Gold Purchase Programme in July 2021, aimed at strengthening reserves using locally sourced gold.
Mr. Bleboo said the central bank adopted an unconventional approach by leveraging Ghana’s gold resources and local currency.
“We realised gold is a reserve asset. So we used the cedi to buy gold locally, export it, refine it, and add it to our reserves,” he said.
Data from the Bank shows that in 2022, about 3.5 tonnes of gold were procured under the programme, valued at GH¢194 million, with associated costs of GH¢74 million.
The programme, however, saw a sharp expansion in 2023 following the introduction of the Gold-for-Oil (G4O) policy. Gold purchases surged to 37 tonnes, valued at GH¢1.6 billion, with costs rising to GH¢1.4 billion.
Mr. Bleboo attributed the increase to policy directives that ensured gold availability for the programme, including the involvement of the Precious Minerals Marketing Company (PMMC) in purchasing gold from small-scale miners without discounts.
By 2024, gold reserves under the programme rose further to 56 tonnes, valued at GH¢4.1 billion. However, the cost of the programme exceeded the value of the gold, reaching GH¢5.7 billion.
Explaining the disparity, Mr. Bleboo said the cost structure of the programme has remained consistent since its inception, driven largely by exchange rate dynamics and operational expenses.
He outlined key cost components, including the “rate gap,” operational discounts, service fees, and purity losses.
The “rate gap,” he noted, is a major contributor to the high costs.
“This arises because gold is purchased at prevailing market exchange rates, which are typically higher than the Bank of Ghana’s official rates used for accounting purposes,” he said.
He further explained that fluctuations in the cedi, particularly periods of appreciation, can widen this gap and increase the apparent cost.
“If you buy gold at a higher exchange rate and by the time you convert the proceeds the cedi has appreciated, the gap widens, and that translates into a cost,” he said.
Despite concerns over the rising figures, Mr. Bleboo insists the programme should not be viewed purely in terms of losses.
“I always refer to it as the cost of the programme. It is the cost of acquiring foreign exchange and maintaining stability,” he stressed.
He added that the scale-up of gold purchases, which reached over 100 tonnes in 2025, also contributed to the higher overall costs but played a key role in supporting the cedi and improving reserve buffers.
The Bank maintains that the programme remains a critical tool in Ghana’s broader strategy to manage external vulnerabilities and stabilise the currency.
By Christabel Success Treve
