The purported $214 Million loss incurred by the Bank of Ghana under the Domestic Gold Purchasing Programme continues to spark serious concerns, as some experts cannot fathom why this time.
The Executive Director of the Africa Centre for Energy Policy (ACEP), Benjamin Boakye is asking a critical question as to why the country is incurring losses at a time when gold prices are climbing on the international market.
And that is not all, amid the gold prices breaking bounds on the international market, Ghana’s gold production is also rising significantly, making the losses very strange.
Benjamin Boakye raised this concern in his article “When Policy Credibility Is Tested: Gold, the Cedi, and the Cost of Short-Term Wins,” cited by The High Street Journal.
A Boom That Should Have Paid Dividends
Globally, gold has been enjoying strong demand. Investors see it as a safe place to keep value in uncertain times. This has been pushing the price of the special metal beyond historical levels. Currently, gold is trading at about $4500 per ounce, making the industry highly profitable.
For Ghana, Africa’s leading gold producer, this should have been a moment of opportunity.
More production plus strong prices should mean more revenue, stronger reserves, and better protection for the cedi. It is like when the harvest is good, you expect full barns, not empty ones.
Yet, amid this favourable situation, according to the IMF, the Bank of Ghana recorded a US$214 million loss under the Gold for Reserves programme, known as the Domestic Gold Purchase Programme (DGPP). This is happening in a boom period, not a downturn.
That is what makes the situation deeply worrying.
“If losses are being incurred during a boom cycle, the implications during a bust cycle will be far more severe,” Ben Boakye lamented.
The Problem Is Not State Involvement
For the Executive Director of ACEP, he sees nothing wrong with the state playing a bigger role in gold trading. In fact, many countries do so successfully.
However, the problem, he argues, begins when state involvement leads to booked losses instead of value creation. He believes that when policies designed to stabilise the currency or build reserves end up draining public resources, something has gone wrong.
He cannot fathom why the state at the center is buying gold, managing gold, and holding gold, at very high international prices but still losing money.
“There is nothing inherently wrong with the state choosing to play a more active role in gold trading. The concern arises when such involvement leads to booked losses and crowds out more effective policy options required to optimise the country’s gold resources without booking losses,” he stated.
Short-Term Wins, Long-Term Pain
One of Boakye’s deepest concerns is that policy decisions may be driven by short-term goals, such as quick support for the cedi, rather than long-term value.
These short-term wins may look good at first. The cedi stabilises briefly. Confidence improves temporarily. But beneath the surface, losses are piling up.
Ben Boakye fears that when losses are hidden inside complex programmes, the pain only shows up later, often when it is too late to reverse course.
The Real Fear: What Happens When Gold Falls?
Gold, like oil and cocoa, moves in cycles as economists call the boom and bust. Prices rise, but they also fall. Production can surge today and slow tomorrow.
This is the fear of the ACEP boss that if Ghana is losing money when gold prices are high, what happens when prices fall?
A bust cycle would mean lower prices, tighter margins, and weaker buffers. Losses that are uncomfortable today could become unbearable tomorrow. At that point, there may be no room left to adjust.
This is why he warns that current losses are not just accounting issues, but rather, they are warning signals.
The Bottomline
For him, he is not calling on the state to abandon its involvement in gold. However, he is advocating for a rethink of how it is done.
Ghana and the international market are still in a boom period. He believes that there is still time to correct mistakes, improve transparency, and design policies that deliver value without losses.
