Financial Management Consultant Dr. Daniel Seddoh has called on the Bank of Ghana (BoG) to adopt a more realistic exchange rate for the Gold-for-Reserve (G4R) programme. He suggests that the dollar should be allowed to trade at around GH¢12 within the context of these transactions to prevent further fiscal bleeding and ensure the programme remains sustainable.
Dr. Seddoh, who is the former CEO of the National Pensions Regulatory Authority (NPRA) and currently runs a private insurance brokerage firm, argued that the central bank must find a balance between currency stabilization and the commercial reality of gold financing. He explained that the primary driver of recent losses is the mismatch between the high cost of financing gold purchases and the rate at which the proceeds are being converted in cedi terms. According to him, if gold is purchased using borrowed funds at high interest rates, the selling price must be adjusted upward to ensure the transaction covers the cost of funds and returns a profit.
The consultant pointed out the irony of the current situation, noting that gold is currently at its highest global price. He questioned the long-term viability of the programme by asking what would happen if international gold prices were to drop while the programme is already struggling to break even. Dr. Seddoh does not agree with the argument that the G4R program should be allowed to incur losses simply because it is achieving its mandate of building reserves. Instead, he maintains that the operations must be made more efficient and commercially sound.
Addressing the potential social impact, Dr. Seddoh acknowledged that allowing the cedi to depreciate to around GH¢12 might spark public outcry, particularly since recent currency stability has led to reduced prices for fuel and other essential items. However, he warned that this stability could be deceptive. He argued that if the dollar is kept artificially low while the G4R incurs losses, the public will eventually be forced to pay off that debt through higher taxes.
The G4R programme was intensified as a strategic initiative to bolster Ghana’s foreign exchange buffers by purchasing gold locally from artisanal and small-scale miners. By accumulating physical gold, the central bank aims to strengthen the national balance sheet and reduce the immediate pressure on the open market for US Dollars.
Recent developments suggest the central bank is already considering changes. The Governor of the Bank of Ghana has indicated plans to review the G4R programme to improve efficiency and has informed Parliament that he has requested the Finance Minister to find independent funding for gold purchases, as the central bank can no longer sustain these financing costs alone. Dr. Seddoh welcomed this move toward a more efficient structure and urged the managers of the G4R to ensure that the revenue from gold sales is sufficient to cover all acquisition costs. He added that if borrowed money was being used to buy the gold, then the cost of those funds must be low enough to guarantee profits.
