IMF Warns of Unsustainable Losses in Central Bank’s Gold Reserve Schem

The International Monetary Fund (IMF) has called for stronger governance and transparency in Ghana's Domestic Gold Purchase Programme (DGPP), warning that the financial costs of the scheme have contributed to pressure on the Bank of Ghana's (BoG) balance sheet. The IMF made the warning in a recent assessment, which found that the DGPP was associated with losses of about GH¢22 billion, equivalent to approximately US$1.7 billion, in 2025.

Unsustainable Losses in Central Bank's Gold Reserve Scheme

The IMF Resident Representative in Ghana, Dr Adrian Alter, said the programme had generated significant losses for the central bank, contributing to a deterioration in its financial position. He noted that the BoG's equity stood at about 7% at the end of 2025, with the Domestic Debt Exchange Programme (DDEP) and the DGPP among the factors behind the deterioration.

Speaking to Channel One TV on Monday, August 24, Dr Alter acknowledged the important contribution of gold to Ghana's recent economic recovery. However, he cautioned that the benefits of gold-related activities should not obscure the costs and risks associated with the programme.

Quasi-Fiscal Activities and Governance Concerns

Dr Alter raised concerns about the involvement of the central bank in what he described as quasi-fiscal activities, warning that such operations could weaken its balance sheet and potentially undermine its ability to maintain price stability. He stressed the importance of preserving the independence of the BoG and avoiding fiscal dominance, arguing that the central bank should not be used as a source of financing for government entities.

The IMF representative further emphasized that government should instead rely on financial markets and commercial banks when it needs to raise funds. He noted that the gold purchasing and selling functions previously undertaken through the BoG had since been transferred to the Ghana Gold Board (GoldBod), effectively separating the activities from the central bank's core mandate.

Strengthening Governance and Transparency

Dr Alter said the experience with the DGPP underscored the need for greater scrutiny of how such programmes are designed and implemented. He urged for stronger governance, transparency, reporting, and caution about the costs incurred by the programme.

The IMF assessment found that the DGPP was associated with significant financial losses, which have contributed to pressure on the BoG's balance sheet. The central bank's equity has been eroded, and its ability to maintain price stability is at risk. Dr Alter's comments come as the IMF continues to monitor Ghana's economic recovery and provide guidance on strengthening the country's financial institutions.

Source: JOY