As the government advances its new gold-backed reserve accumulation strategy under the Ghana Accelerated National Reserve Accumulation Programme, GANRAP, Prof. Williams Kwasi Peprah of Andrews University, says the policy itself and alone will not deliver the intended outcome.
The finance professor suggests that building reserves is only half the job. For the policy to be effective, there are other mechanisms that must be implemented to complement the policy.
He says mechanisms such as building trust, discipline, and other complementary safeguards are as important as the policy itself, and they are what will determine the success.
In an interaction with The High Street Journal, the finance professor described the 15-month import cover ambition as a defensible precautionary pivot, particularly after Ghana’s 2022 external shocks exposed vulnerabilities in foreign exchange buffers.
But he cautioned that without strong governance architecture and macroeconomic coordination, the policy could generate unintended pressures.
Transparency Is Non-Negotiable
Prof. Peprah highly recommends that the government ensure transparency in the implementation of the policy.
He argues that the government must commit to regular public reporting on gold purchases, reserve composition, and valuation methods. Clear disclosure, he says, reduces the risk of leakages, speculation, and rent-seeking.
He adds that formalisation of the gold value chain is equally critical. Licensing reforms, independent audits, refinery certification, and even blockchain-based traceability pilots could ensure that gold receipts are verifiable and ethically sourced.
For Prof. Peprah, if you are building reserves through gold, every ounce must be traceable.
“Strong transparency & governance (public reporting of gold purchases, reserve composition, valuation rules). Formalisation and traceability in the gold value chain (licenses, audits, refinery certification, blockchain/traceability pilots),” he mentioned, as some of the complementary policies.
Fiscal and Monetary Coordination
Prof. Peprah also highlights the need for a clear framework explaining how gold purchases interact with the fiscal balance and the balance sheet of the Bank of Ghana.
Reserve accumulation, he notes, can affect liquidity conditions and exchange rate stability. If not carefully sterilised, large-scale gold purchases could inject excess liquidity into the system, fuelling inflationary pressures.
He therefore calls for explicit rules governing sterilisation operations and coordination between fiscal authorities and the central bank. In practical terms, this means clarity on who bears the cost of reserve buildup and how it fits within broader macroeconomic targets.
When to Save, When to Spend
Another pillar of his recommendation is the establishment of a stabilization or sovereign buffer rule.
Building reserves without a clear withdrawal framework can create political friction during downturns. Prof. Peprah suggests the government define conditions under which reserves can be deployed, for example, during severe terms-of-trade shocks or balance-of-payments stress.
A ring-fenced stabilization vehicle, if properly structured, could prevent ad hoc drawdowns while reinforcing investor confidence that reserves are not politically discretionary funds.
Protecting Market Confidence
Prof. Peprah further emphasises that reserve policy must not crowd out debt management reforms or international coordination.
Continued engagement with development partners and institutions such as the International Monetary Fund is essential to sustain credibility, avoid duplication of policy signals, and maintain investor confidence.
He warns that accumulating reserves while neglecting fiscal discipline would send conflicting signals to markets.
Diversifying Foreign Exchange Sources
Beyond governance and coordination, Prof. Peprah points to a broader structural imperative of diversifying foreign exchange earnings.
Gold accumulation should complement, not substitute for, export diversification, value addition in mining and refining, tourism growth, and services expansion. A stronger FX base reduces the burden on reserve accumulation as the sole insurance mechanism.
In simple terms, building buffers is wise, but broadening the economy’s earning power is wiser.
A Conditional Endorsement
Prof. Peprah’s overall judgment is measured but firm. GANRAP, he argues, is a plausible insurance strategy given Ghana’s recent external shocks. But its desirability rests on two conditions; a rigorous governance and strong fiscal and social safeguards.
If gold sourcing is formalised, accounting is transparent, macro policies are aligned, and public investment is protected, the policy can strengthen resilience.
If not, it risks becoming costly, contentious, and economically distortive.
