Editorial: Betting on gold’s elevated global prices

Finance Minister Cassiel Ato Baah Forson informed parliament last week that government has set itself an ambitious target of raising the country’s gross international reserves to an equivalent of 15 months import cover by end-2028, under a gold-backed accumulation strategy.

The current reserve level of 5.7 months import cover, though above the traditional three-month adequacy benchmark, is “not sufficient to provide adequate self-insurance against disruptive economic shocks”, Dr. Forson emphasised in presenting the Ghana Accelerated National Reserve Accumulation Policy (GANRAP) to the legislature.

Under the new framework, reserves are projected to reach at least 8.6 months of import cover by end-2026, exceed 11.8 months by 2027 and attain 15 months by 2028. “This implies an average annual accumulation of 3.1 months import cover over three years,” Dr. Forson added.

The strategy’s operational anchor is a weekly gold purchase target of approximately 3.02 tonnes. At an assumed price of US$5,000 per ounce, annual gross receipts are projected at about US$25.28billion.

The minister stated that gold is “the most reliable and immediate instrument for accelerating reserve accumulation without increasing public debt, or introducing distortions in domestic markets”, citing elevated global prices.

Ghana Gold Board is to purchase a minimum 2.45 tonnes of gold per week from artisanal and small-scale miners (ASM). Over the next three years, the Board aims to mop up about 127 tonnes annually from ASM producers – generating more than US$20billion in foreign exchange each year at current prices.

In the large-scale sector, government will invoke pre-emption rights under the Ghana Gold Board Act, 2025 (Act 1140) and Minerals and Mining Act, 2006 (Act 703) to acquire at least 20 percent of output, equivalent to about 0.57 tonnes per week.

Gold acquired under this arrangement “shall only be sold by the central bank subject to prior approval of Cabinet and parliament”, underscoring the holdings’ strategic nature.

This policy marks a departure from Ghana’s previous reliance on borrowing to build reserves. Between 2018 and 2021, the central bank borrowed US$2billion from international commercial banks including JPMorgan Chase, Standard Chartered and Citibank at a cost of US$182million.

Ghana is still servicing those debts following the 2022 debt default, with US$1.5billion due to Eurobond holders in 2026 alone.

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