After careful scrutiny of the plan to ensure a stable currency by the Bawumia-led New Patriotic Party, IMANI Africa has raised doubts about the feasibility of the said campaign promise.
The flagbearer of the ruling party for the 2024 Presidential Elections as part of his plans to strengthen the cedi if elected says his government will do so through the Gold Purchasing Programme.
The party in its manifesto explains that it will ensure that the Bank of Ghana will scale up its purchasing of gold from the local market, especially, small-scale miners. The gold purchased would be used to build reserves to back the cedi and support its strength against other major foreign trading currencies.
But policy think tank, IMANI Africa at its 2024 IMANIFesto, which is a platform to analyze campaign promises by candidates, passed a verdict that the effectiveness and feasibility of the promise are in doubt.
Senior Research Associate at IMANI Africa, Dennis Asare indicates that an assessment of the proposal reveals that there are sustainability and volatility of gold prices issues which can render the policy ineffective.
“What we are saying is that, if you look at this promise alone, this year, there was an increase in terms of small-scale mining. But in periods where small-scale mining output does not grow, if this is going to be one of the anchor promises for addressing our exchange issues, how then does the BoG get more gold to address that,” he quizzed.
He continued that, “if we buy gold from large-scale miners in cedis, because some of their capital expenditure is in dollar denomination, they will still have to convert to the dollar. What we paid in cedis, they will convert some of it to the dollar so that they can finance their operations.”
With these reasons and many others, IMANI Africa is convinced that the programme may not work to expectation hence labelling it effective.
“This programme may not be effective because what will make this programme effective is that gold prices must be so high that you can buy a lot more to shore up your forex reserves which we don’t think is possible within the shortest possible time looking at the global market,” the Senior Research Associate at IMANI concluded.
