Goldbod: Price of All, Value of None

Table of Contents

Understanding the Concept of Loss in Economic Policy

In economics, the concept of loss is not always straightforward. While accounting and financial perspectives define a loss as total revenue minus total cost, economic policy involves a more nuanced evaluation. The recent debate about the reported US$214mn loss by the Bank of Ghana (BoG) in its Gold-for-reserves programme, also known as the Domestic Gold Purchase Programme (DGPP), highlights this complexity.

From an accounting perspective, a loss occurs when total costs exceed total revenue. However, in financial economics, the present value of future cash flows is considered, often incorporating discount factors like interest rates. For example, investing Ghs100 and receiving Ghs110 at the end of the year may seem profitable in accounting terms, but if the opportunity cost of that investment could have yielded Ghs15, it represents an economic loss.

Economic policy interventions must be evaluated based on their incremental economic value and alignment with broader objectives. Expenditure on education, for instance, is viewed as an investment rather than a cost because it contributes to long-term economic growth. Similarly, the DGPP should be assessed not merely on financial losses but on the economic benefits it generates.

The Role of GOLDBOD in Ghana’s Gold Trade

Before the establishment of the Ghana Gold Board (GOLDBOD), Ghana was not fully benefiting from its gold output. According to data from the United Nations COMTRADE, the UAE imported USD7.1 billion worth of gold from Ghana in 2022 and 2023, while Ghana reported only USD4.8 billion. This discrepancy suggests that a significant portion of Ghana’s gold production was smuggled out of the country.

GOLDBOD was created to address this issue. Its primary objectives include generating foreign exchange, supporting the accumulation of gold reserves, and overseeing gold-related activities. By sourcing gold from licensed artisanal and small-scale miners and paying in cedis based on the BoG’s reference rates, GOLDBOD has helped reduce smuggling and increase official gold exports.

Realising the Objectives of GOLDBOD

In just one year since its inception, Ghana’s ASM gold export value increased from 63.6 metric tons (mt) in 2024 to 101mt as of 23rd December 2025. This achievement is attributed to GOLDBOD’s efforts to optimise the accounting of gold production and reduce smuggling. The reduction in smuggling has led to significant forex inflows, which are transformative for the broader economy.

The BoG’s trading loss of USD214mn is a result of GOLDBOD’s strategy to buy gold at world market prices, incentivising miners to sell to GOLDBOD rather than to foreign buyers. This pricing strategy has reduced smuggling and enabled Ghana to benefit from its gold exports. However, the loss is not purely financial; it is an economic policy cost aimed at achieving greater economic benefits.

Evaluating the Economic Benefits of the DGPP

The DGPP has had a significant impact on Ghana’s economy. The BoG’s gross international reserves increased from USD8.98bn in 2024 to $11.12bn as of October 2025, and are projected to reach $13bn by year-end 2025. This increase in reserves has contributed to a stronger Ghana cedi, which has had several positive effects:

• Impact on the USD/GHS Exchange Rate: The cedi appreciated from an average rate of GHs14.2 to US$1.00 in 2024 to 12.53 in 2025, marking a 13% appreciation.
• Impact on Government Debt Service Savings: The appreciation has saved the government over GHS6.2billion in external debt service.
• Impact on Foreign Exchange Expenditure Savings: The cedi’s appreciation has resulted in savings of over GHS6.45bn on payments to independent power producers.
• Inflation Reduction: Inflation fell from 24% in 2024 to 6.3% in November 2025, largely due to the cedi’s strengthening.
• Import Bill Savings: The import bill is projected to end 2025 at about USD17.7bn, with significant savings accrued to the economy.

The IMF and the ‘Loss’

The IMF has flagged the US$214mn loss as a policy cost. While this figure is significant, it should be viewed in the context of the broader economic benefits generated by the DGPP. The IMF’s expectation of currency depreciation as part of adjustment mechanisms was not met in Ghana’s case, as the cedi appreciated instead. This outcome, driven by commodity prices and reduced smuggling, has been welcome and has contributed to economic stability.

Conclusion

The US$214mn spent on the DGPP should not be seen as a loss but as a policy cost that has yielded substantial economic benefits. The appreciation of the Ghana cedi, reductions in inflation, and savings on debt and import bills are clear indicators of the programme’s success. Moving forward, it is essential to reduce or eliminate the cost of the programme to maximise its economic benefits.

The disparities between the BoG’s foreign exchange rates and open market rates need to be addressed to prevent foreign exchange losses. Additionally, building resilience and transforming the economy’s structure will be crucial to sustaining the gains achieved so far.

Economic policy is not just about accounting; it requires a holistic approach to evaluate its impact. As the article concludes, we must avoid knowing the price of everything and the value of nothing.