Co-Chair of the Ghana Extractive Industries Transparency Initiative (GHEITI) and policy analyst, Dr. Steve Manteaw, is pushing back on criticisms against the Bank of Ghana’s (BoG) latest decision to boost the cedi with reserves under the Domestic Gold Purchase Program.
At a meeting with the heads of banks after the last Monetary Policy Committee (MPC), the Governor of the Bank of Ghana, Dr. Johnson Asiama, revealed plans to sell US$1.15 billion into the forex market under its Domestic Gold Purchase Programme this month.
The announcement has drawn criticisms from some quarters, who are warning of a possible depletion of the country’s reserve and reckless monetization.
Already, both the International Monetary Fund (IMF) and the World Bank have warned the Central Bank against excessive intervention in the forex market. This appears to give credence to the new spirited criticism following the BoG’s announcement.
Dr. Manteaw is rejecting the criticisms, warning that the move is a prudent use of excess reserve capacity to support the cedi and maintain macro stability.
Justifying his defence, he cited Saudi Arabia’s use of oil revenues to support its currency, underscoring that resource-rich nations often funnel excess foreign income into their currency markets.
The policy analyst explains that the gold-derived dollars are drawn from above-target reserves, meaning core reserve buffers remain intact.
One benefit of this move is to improve liquidity to address the erratic currency swings and deepen interbank forex activity. In addition, the operation signals that Ghana is leveraging its natural resources responsibly to stabilize the cedi. — sending a message to investors that the central bank is active and responsive.
Critics fear that sudden demand surges can outstrip supply and that overreliance on intervention masks structural imbalances. There’s also the fear that once reserve buffers are converted, replenishment could be difficult.
Yet, Dr. Manteaw argues that as long as reserves remain above our threshold, using the gold program to inject forex is not recklessness but smart reserve management.
“Those raising alarm about BoG’s decision to offload some ‘gold-dollars onto the market, should note that the Saudis have not shored up their currency with chocolate but petro-dollars. It’s a balancing art. For as long as we exceed our reserve target, it makes sense to go this route,” the policy analyst argued.
In the coming weeks, the real test will be how the market responds to the intervention. Analysts will be monitoring whether the cedi steadies, inflation stays on track, and confidence in central bank action holds.
But for now, Manteaw’s backing adds weight to the argument that BoG’s gold-to-dollar strategy, though aggressive, may be a calculated strike to defend the country’s currency.
