Come once more, Bank of Ghana! – Life Pulse Daily

Editor-in-chiefDecember 27, 20254 Mins read34

Come once more, Bank of Ghana! – Life Pulse Daily

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Bank of Ghana: A Call for Accountability on $214 Million DGPP Losses

Introduction

The economic stability of Ghana is a subject of intense public scrutiny, particularly regarding the mechanisms used to bolster foreign reserves and stabilize the local currency. Recently, a significant report by the International Monetary Fund (IMF) highlighted substantial financial discrepancies within the Domestic Gold Purchase Programme (DGPP). Specifically, the report indicates a loss of US$214 million attributed to artisanal and small-scale (ASM) gold transactions.

While the Bank of Ghana (BoG) has acknowledged these figures, their characterization of the event as “financial risks” rather than realized losses has sparked a debate. This article provides a pedagogical breakdown of the situation, exploring the difference between risk and loss, the role of GoldBod, and the urgent need for transparency regarding the use of taxpayer funds.

Key Points

The Core Figure: The IMF reports a US$214 million loss (0.2% of GDP) stemming from the DGPP in 2025.
The Official Stance: The Bank of Ghana emphasizes the program’s macroeconomic benefits, labeling the loss as “flagged financial risks.”
The Semantic Debate: There is a distinct difference between a “risk” (potential exposure) and a “loss” (realized financial deficit).
The Role of GoldBod: As an aggregator, GoldBod plays a critical role in off-take fees, which contributed to the deficit.
Public Accountability: Citizens and experts are demanding a detailed explanation of how taxpayer money was utilized and lost.

Background

Understanding the Domestic Gold Purchase Programme (DGPP)

The Domestic Gold Purchase Programme (DGPP) was established by the Bank of Ghana as a strategic policy tool. The primary objective was to accumulate gold reserves to support the country’s international reserves and stabilize the Cedi. By purchasing gold domestically, the BoG aimed to access large volumes of foreign exchange without contracting new external debt. This initiative was seen as a sovereign solution to currency volatility.

The Role of GoldBod and ASM Gold

The program relies heavily on the Artisanal and Small-scale (ASM) mining sector, which produces “doré” gold (unrefined gold bars). To formalize this sector, the government utilized an entity known as GoldBod (or the Gold Board structure) to act as the primary aggregator. GoldBod’s mandate was to channel gold-based inflows from small-scale miners into the official market, ensuring that the BoG could purchase these reserves.

Analysis: Risk vs. Loss

The central tension in this story lies in the terminology used by the Bank of Ghana. To understand the gravity of the situation, we must define the financial terms being used in the official response versus the reality on the ground.

Defining the Terms

1. Financial Risk: In banking and economics, a risk is a potential for loss. It is a forward-looking metric that suggests something might go wrong. For example, lending money to a risky borrower carries a “risk” of default.

2. Realized Loss: A loss is an event that has already occurred. It is a backward-looking metric. If the borrower defaults and the bank loses its capital, that is no longer a risk—it is a realized loss.

The $214 Million Reality

According to the IMF report, the $214 million deficit is not a theoretical risk; it is a fait accompli—an established fact. The funds were spent on trading losses and GoldBod off-takers’ fees that exceeded the value generated. Therefore, when the BoG describes this as merely “flagged financial risks,” it risks obscuring the fact that the money is already gone from the coffers.

As noted by critics, conflating these terms can be a method of dodging responsibility. If the money is lost, the public deserves to know how it happened, rather than being told it was merely a “risk” that materialized.

Practical Advice: Ensuring Financial Transparency

For citizens, investors, and policy observers, understanding how to interpret central bank communications is vital. Here are practical steps to ensure accountability:

How to Analyze Central Bank Reports

1. Look for “Realized” vs. “Unrealized” Values: When reading reports on reserves or asset purchases, distinguish between market value fluctuations (unrealized) and actual cash outflows (realized). The $214 million is a realized cash impact.

2. Scrutinize “Off-Taker” Fees: In commodity purchase programs, intermediaries (like GoldBod) charge fees. Citizens should demand a breakdown of these fees to ensure they are market-competitive and not inflated.

3. Demand Cost-Benefit Analysis: While the BoG argues that the DGPP supported currency stability, the public has a right to ask: Did the benefits outweigh the $214 million cost? This requires transparent data comparison between the cost of the losses and the savings from avoiding external debt.

FAQ

What is the Domestic Gold Purchase Programme (DGPP)?

The DGPP is a monetary policy initiative by the Bank of Ghana to buy gold locally to build up foreign reserves and support the Cedi without borrowing from abroad.

Who is GoldBod?

GoldBod refers to the entity or board responsible for aggregating gold from artisanal and small-scale miners and selling it to the central bank. They act as the middleman in the DGPP.

Why does the Bank of Ghana call it a “Risk”?

Central banks often use technical language to describe exposure to market fluctuations. However, in this context, the IMF report confirms that the money has already been lost through trading and fees, making it a realized expense rather than just a future possibility.

Is the $214 million taxpayer money?

Yes. As the Bank of Ghana is a state institution, any losses incurred ultimately affect the national purse. This impacts the country’s ability to service debt and maintain fiscal stability, which falls on the taxpayer.

Conclusion

The revelation of a US$214 million loss within the Domestic Gold Purchase Programme is a critical moment for Ghana’s economic governance. While the program’s intent—to build reserves without debt—is sound, the execution resulting in such significant losses requires rigorous examination. The Bank of Ghana must move beyond technical semantics and provide a clear, transparent explanation of how these funds were lost. Accountability is not just about reporting numbers; it is about explaining to the people of Ghana how their resources are managed and ensuring that measures are in place to prevent future occurrences.