One factor that cannot be discounted in the present state of Ghana’s economy is the rise in gold prices on the international market; however, as the country celebrates the “golden moment”, it is cautioned not to celebrate blindly.
Amid the gains, there is a call on Ghana to resist the temptation of overconfidence as global prices soar.
The Executive Director of the Africa Centre for Energy Policy (ACEP), Benjamin Boakye, cautions that history should tell the country that the rally cannot be trusted to last, and hence there is the need for Ghana to enjoy the gains with eyes wide open.
In his article titled “When Policy Credibility Is Tested: Gold, the Cedi, and the Cost of Short-Term Wins,” cited by The High Street Journal, Ben Boakye reminds policymakers that commodity booms have a dangerous habit of creating false comfort.
He narrates that as prices rise, revenues look good, and governments often act as if the good times will last forever. History, however, tells a different story.
He adds that the history is not very far from the country, as Ghana has been here before.
The Executive Director of ACEP recounts that barely a decade ago, the country was caught flat-footed when global commodity prices turned against it. Between 2014 and 2015, both oil and gold, two of Ghana’s most important exports, suffered sharp declines. Oil revenues fell drastically, with the country losing about one billion dollars in expected income in 2014 alone.
At the same time, gold prices tumbled to around 1,200 dollars an ounce, down from a high of about 1,900 dollars in 2011. The impact, he says, was phenomenal.
The government’s project revenues at the time were severely hit, coming under severe strain. The ripple effect was seen in the cedi’s and everyday life became harder for ordinary Ghanaians.
Today, gold prices are strong, production is increasing, and optimism is returning. For many, this feels like a long-awaited relief. But Boakye’s argument is that this is exactly when discipline matters most. Over-reliance on this rally will mean an economy digging its own grave.
He suggests that it is very crucial for the government not to treat temporary windfalls as guaranteed income. Rather than rejoicing, Boakye believes Ghana should be asking harder questions. How is the extra gold revenue being used? Is it supporting long-term development, or financing short-term political wins? Are savings being built for the inevitable downturn, or is the country once again living as if the boom will never end?
“It is in the interest of the government to tread carefully during commodity boom cycles. Ghana has lived through the consequences of policy complacency before, and the NDC should know better,” he cautioned.
He recounted that, “During the 2014 to 2015 downturn, when both oil and gold prices performed poorly, the country suffered severe fiscal stress. In 2014 alone, revenue shortfalls from oil were about one billion dollars. In the same year gold price declined to about $1200 from the 2011 peak of $1900. Today, the cycle has reversed. Gold prices are strong, and production is rising. That reversal, however, demands caution rather than confidence.”
He fears that if Ghana appears complacent now, it risks derailing the gains when conditions tighten.
The strong gold prices, he admits, are an opportunity, but only if managed with humility and restraint. Ben Boakye warns that overconfidence in commodity booms has cost the country in times past, and hence, “once bitten, twice shy” should be the country’s watchword now.
