Ghana’s Emerging Foreign Currency Reserves: Where the GoldBod Narrative Still Falls Short

Introduction

Recent data from the Bank of Ghana (BOG) reveals a notable increase in Ghana’s external reserve position. Gross International Reserves have risen steadily, import cover has improved, and headline indicators point to a stronger external buffer than the country had a year ago. On the surface, this is welcome news.

However, beneath the aggregate numbers lies a more complex and uncomfortable truth. The rise in foreign currency reserves has occurred at a time where there has also been a sharp reduction in gold holdings, both in value and in tonnage.

This divergence has become central to a growing public debate, particularly against the backdrop of claims that foreign currency injected into the financial system is largely being generated through GoldBod operations.

Key Points

Background: The Numbers Tell Two Different Stories

From the Economic and Financial data shared by the BOG, between September and December 2025, Ghana’s gold holdings fell sharply in tonnage, while total reserves continued to rise.

In value terms, gold holdings also declined after peaking earlier in the year, despite cross-border gold prices remaining on a strong upward trajectory.

This immediately challenges the popular narrative. If GoldBod were consistently generating fresh foreign currency inflows that were strengthening the reserve position, one would reasonably expect gold holdings to be stable or increasing.

Instead, the data show the opposite: gold is falling, foreign currency assets are rising.

Analysis: The Governor’s Clarification

In response to public concerns, the Governor of the Bank of Ghana provided a crucial explanation during the MPC press briefing. According to the Governor, the reduction in gold holdings was not accidental nor a sign of distress, but a deliberate reserve management decision.

At the time the decision was taken, gold reportedly accounted for over 40 percent of Ghana’s total reserves, far above the 20-25 percent range seen among many peer countries.

The BOG, in its attempt to address this concentration risk, the Bank decided to rebalance its reserve portfolio by converting a portion of its gold holdings into foreign currency.

The Governor emphasized that:

1. The proceeds from the converted gold remain part of Ghana’s cross-border reserves
2. The sharp decline in gold holdings does not represent a loss of national assets, but a change in reserve composition in line with best practice

From a central banking and portfolio management perspective, this explanation is coherent. Reserve diversification is standard practice (just as diversification in any investment portfolio) and overconcentration in any single asset, including gold, carries risk.

Where the Narrative Still Breaks Down

While the Governor’s explanation clarifies why gold was sold, it inadvertently exposes the weakness in the broader GoldBod narrative.

If foreign currency injected into the financial system were primarily being generated by GoldBod operations, there would be no need for the central bank to reduce its exposure to gold in order to boost foreign currency reserves.

The fact that gold had to be converted into FX to rebalance reserves suggests that FX reserve enhancement is being supported by asset conversion and external inflows, not by an independent, self-sustaining GoldBod FX pipeline as Ghanaians are made to believe.

Put differently, selling gold to acquire foreign currency is not the same as generating new foreign currency capacity. It improves liquidity and flexibility in the short run, but it draws down an actual asset whose value has been rising sharply in recent years.

This distinction matters. Asset conversion can enhance reserve adequacy temporarily. Structural FX generation comes from exports, remittances, and sustained balance-of-payments surpluses. Conflating the two risks overstating the role of GoldBod and understating the real drivers of Ghana’s improving external position.

Practical Advice: Understanding Reserve Management

For citizens and investors trying to understand Ghana’s economic situation, it’s important to recognize several key points:

**Reserve diversification is normal practice**: Central banks routinely adjust their reserve compositions to manage risk. Having 40% of reserves in gold was unusually high and warranted rebalancing.

**Asset conversion vs. new generation**: There’s a critical difference between selling existing assets to obtain foreign currency and generating new foreign currency through trade, investment, or other economic activities.

**Multiple drivers of reserve growth**: Ghana’s improving reserve position likely reflects several factors including better export performance, improved cocoa prices, diaspora remittances, and possibly GoldBod operations.

**Transparency matters**: The Bank of Ghana’s willingness to explain its decisions is positive, but continued transparency about the sources of foreign currency inflows remains essential for public trust.

FAQ: Common Questions About Ghana’s Foreign Currency Reserves

**Q: Why did the Bank of Ghana sell gold when its price was rising?**
A: The BOG was addressing concentration risk. Having over 40% of reserves in gold was unusually high compared to international standards. The sale was about portfolio management, not a lack of confidence in gold’s value.

**Q: Does the reduction in gold holdings mean GoldBod isn’t working?**
A: Not necessarily. The reduction in gold holdings doesn’t directly prove or disprove GoldBod’s effectiveness. It indicates that the central bank was managing its overall reserve composition, which may or may not be related to GoldBod operations.

**Q: How can we tell if foreign currency is being genuinely generated or just converted from existing assets?**
A: This requires detailed balance of payments data and transparency about the sources of foreign currency inflows. Genuine generation would show up as sustained surpluses in trade and services accounts.

**Q: Is Ghana’s improving reserve position sustainable?**
A: Sustainability depends on continued positive external flows (exports, remittances, investment) rather than one-time asset conversions. The current improvement appears to have multiple drivers, which is positive for sustainability.

Conclusion

The Bank of Ghana’s actions may be defensible on technical reserve management grounds. But when placed alongside the public messaging around GoldBod, a fundamental contradiction remains.

I will conclude everything with a question I asked my good friends Kingsford Duodu Adane and Afari Sadat Saeed Samuel in our discussion yesterday. I believe readers too can help with a response.

If GoldBod is bringing in all the necessary FX needed as we’re made to believe, why would BOG sell an asset whose value has been on the rise in recent years?

This question remains at the heart of the ongoing debate about Ghana’s foreign currency reserves and the role of GoldBod in the country’s economic recovery. The distinction between converting existing assets and generating new foreign currency capacity is crucial for understanding the true state of Ghana’s external position and the sustainability of its economic progress.

Sources

– Bank of Ghana Economic and Financial Data (September-December 2025)
– Monetary Policy Committee Press Briefing Statements
– International Monetary Fund guidelines on reserve management
– Central Banking literature on optimal reserve composition

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