Flagbearer of the New Patriotic Party (NPP) and former Vice President Dr Mahamudu Bawumia, has described Ghana’s gold-for-oil and gold-for-reserves initiatives as an “unconventional” response to the country’s foreign exchange crisis, saying the programmes were conceived at a time when Ghana had lost access to international capital markets and was struggling to secure the dollars needed to support the economy.
According to him, Ghana traditionally relied on raising about US$3 billion annually from international capital markets to support economic management, but the disruption to global financial markets, worsened by the Russia-Ukraine war, left the country unable to access the financing it needed.
The resulting balance-of-payments pressures contributed to severe foreign-exchange constraints and accelerated depreciation of the cedi, forcing policymakers to consider alternative ways of generating and conserving foreign exchange.
“We were really constricted in terms of availability of foreign exchange. At the same time, the cedi was depreciating almost on a daily basis. And we had to think about how to deal with this problem,” Dr Bawumia said.
He said his concern was reinforced by the experience of Sri Lanka, where foreign-exchange shortages contributed to difficulties in importing essential goods.
It was against that background, he said, that Ghana’s position as a major gold producer presented an opportunity to use the country’s own commodity resources to address its foreign-exchange vulnerability.
Dr Bawumia said the idea occurred to him while exercising one morning.
At the time, Ghana was Africa’s leading gold producer and among the largest gold producers globally, yet the country held only about 8.7 tonnes of gold reserves at the Bank of Ghana in 2021.
“I said this cannot be right,” he recalled.
Dr Bawumia recounted how the Domestic Gold Purchase Programme (DGPP) was conceived while speaking at an engagement with the Ghana National Association of Small-Scale Miners (GNASSM) as part of consultations on reforms in Ghana’s extractive sector.
The engagement focused on the challenges confronting the small-scale mining sector and practical measures to promote responsible mining, protect the environment, create jobs and strengthen local value addition.
Dr Bawumia said the consultations, which also involved members of the NPP’s Identifiable Groups Committee on the Extractive Sector, were intended to gather practical ideas for building a more sustainable and productive extractive industry.
“Together with members of the NPP’s Identifiable Groups Committee on the Extractive Sector, I had a productive engagement today with the Ghana National Association of Small-Scale Miners as part of our ongoing consultations with key stakeholders,” he said in a social media post.
He said the consultations formed part of broader efforts to develop reforms that would make the extractive sector more sustainable while ensuring that Ghana derives greater economic value from its natural resources.
Dr Bawumia pledged to continue engaging stakeholders as discussions on reforms in the sector progress, stressing the importance of bringing industry players and other key actors into the policy process.
Turning Ghana’s gold into reserves
The central idea DGPP was straightforward: Ghana could use cedis to purchase gold produced domestically and convert that gold into a national reserve asset without first having to obtain foreign exchange.
Because the commodity was produced locally, the country did not have to first export another commodity, earn dollars and then use those dollars to purchase gold abroad.
“The thing about gold for us is that because we produce gold, we can use our cedis to buy the gold. We don’t need to export cocoa or diamonds to get dollars to go out there and buy gold,” Dr Bawumia explained.
He described the proposal as “out-of-the-box thinking”, saying it was not based on a conventional economic textbook model.
“There was no textbook in economics that would tell you about the gold and reserves problem. It was out-of-the-box thinking,” he said.
The Bank of Ghana subsequently spent almost one year examining the proposal before concluding that it could be implemented.
That process eventually led to the launch of the DGPP on 17 June 2021, against a backdrop of depleted foreign-exchange buffers, heightened exchange-rate pressures and weakened investor confidence.
The programme was designed not merely as a gold-buying scheme, but as a broader strategy to strengthen Ghana’s external position and provide the central bank with an additional instrument for managing foreign-exchange pressures.
US$5bn gold purchase in 2 years
Dr Bawumia said the programme subsequently enabled Ghana to purchase approximately US$5 billion worth of gold within two years, helping to strengthen the country’s foreign-exchange reserves.
The accumulation of gold reserves, he argued, also increased the Bank of Ghana’s capacity to intervene in the foreign-exchange market when necessary.
By the end of 2024, he said, the International Monetary Fund had removed a restriction that had limited the Bank of Ghana to a maximum of US$80 million in monthly foreign-exchange market intervention.
Following the removal of that restriction, the central bank was able to put at least US$1 billion a month into the foreign-exchange market, according to Dr Bawumia.
He argued that the increase in foreign-exchange supply should ease pressure on the cedi through basic demand-and-supply dynamics.
“From $80 million maximum to $1 billion a month. What does economics tell you? When you have an increase in supply, what will happen to price? It comes down,” he said.
The broader effect, he argued, was to give Ghana greater capacity to manage foreign-exchange volatility at a time when access to international financing had become severely constrained.
Reserve accumulation strengthens cedi
The Bank of Ghana’s defence of the DGPP centres on its contribution to reserve accumulation, external resilience and macroeconomic stability.
The programme has enabled the central bank to acquire gold domestically and add to its reserve assets without having to compete for foreign exchange in the domestic market.
This mechanism reduces structural pressure on foreign currency demand because the country can convert locally produced gold into an internationally recognised reserve asset without first purchasing foreign exchange to acquire the gold.
The conversion of gold into monetary gold also strengthens reserve adequacy and enhances the central bank’s ability to provide liquidity support to the foreign-exchange market during periods of stress.
The programme has further diversified the composition of Ghana’s reserves, reducing dependence on other foreign-currency-denominated assets.
That diversification, according to the programme’s assessment, has helped bolster confidence in the Bank of Ghana’s external position and its broader policy framework.
Taken together, the effects have contributed to moderating exchange-rate volatility and reinforcing stability in the foreign-exchange market.
Four core objectives
The DGPP, launched in June 2021, was built around four principal objectives.
The first was to increase the Bank of Ghana’s gold reserves by 100 per cent within five years. At the time of the programme’s launch, the Bank held 8.74 tonnes of gold.
The second objective was to diversify the Bank’s foreign-exchange reserve portfolio, thereby reducing excessive reliance on conventional foreign-currency reserve assets.
The third was to leverage Ghana’s gold holdings to raise cheaper short-term and collateralised financing.
The fourth was to use stronger reserves to build confidence in the economy and support a more stable currency.
The strategy therefore went beyond simply increasing the quantity of gold held by the central bank.
It sought to transform Ghana’s domestic commodity base into a strategic financial asset capable of supporting liquidity, reserve management and macroeconomic stability.
How the DGPP operates
The Domestic Gold Purchase Programme operates through several channels.
Under the first channel, the Bank of Ghana purchases refined gold from mining companies at their respective London Bullion Market Association (LBMA)-certified refineries.
The gold is then placed with international bullion banks as part of the Bank’s reserve-management operations.
The second channel involves the purchase of doré gold from approved gold aggregators.
The doré is shipped to LBMA-certified refineries, where selected quantities are refined into monetary gold and, where appropriate, placed with international bullion banks as part of the central bank’s reserve-management operations.
The third and particularly significant channel involves the purchase of doré gold from artisanal and small-scale miners through the Ghana Gold Board (GoldBod).
That gold can be exported in its unrefined form to off-takers or gold buyers to generate foreign exchange, mainly for market-intermediation purposes.
The Precious Minerals Marketing Company (PMMC) initially served as the implementing agency before transitioning into the Ghana Gold Board (GoldBod).
The structure means the programme connects domestic gold production to the country’s reserve-management and foreign-exchange system.
Gold for Reserves: Quick turnaround
A major component of the strategy is the Gold for Reserves (G4R) programme.
Under G4R, doré gold is acquired primarily for foreign-exchange generation and is disposed of within the shortest possible period after purchase.
The programme therefore does not depend on holding gold for a future increase in its international market price.
Gold is not purchased as a conventional speculative investment in anticipation of price appreciation.
Instead, the financial outcome depends on the prevailing market price when the gold is sold, the price at which it was acquired and the costs directly associated with the transaction.
The programme’s financial outcome is consequently determined by sale proceeds net of directly attributable selling costs, relative to the acquisition cost of the gold, together with interest earned on gold deposits.
That distinction is important because the G4R mechanism is designed primarily as a foreign-exchange and reserve-management instrument rather than a conventional gold-trading operation.
Gold for Oil extends the strategy
The gold-based strategy was subsequently extended to the Gold for Oil (G4O) programme in 2022.
The initiative was introduced against the backdrop of sharply rising international crude-oil prices and increasing domestic petroleum prices.
Domestic ex-pump petroleum prices had surged by as much as 230 per cent in one year, while petroleum imports had become the country’s largest commodity import category.
The combination placed considerable pressure on Ghana’s already limited foreign-exchange reserves.
G4O was therefore designed to use gold to generate or provide the foreign exchange required to support petroleum imports.
Under the arrangement, gold was sold to support foreign-exchange requirements associated with the procurement of petroleum products through government-to-government arrangements.
The initiative helped secure petroleum imports at competitive prices while easing pressure on the foreign-exchange market.
It also helped moderate the volatility of ex-pump petroleum prices.
The impact extended beyond the fuel market because changes in petroleum prices feed directly into transport costs and, subsequently, inflation.
By helping to moderate the pass-through of international oil-price shocks into domestic fuel prices, the programme was intended to provide some relief to transport operators, businesses and households.
Commodities as financial instruments
The underlying philosophy behind both programmes represents a broader shift in the way Ghana can use its natural resources.
Rather than treating commodities simply as products to be exported in exchange for foreign currency, the gold strategy seeks to use Ghana’s commodity wealth as an instrument for liquidity, reserve accumulation, trade facilitation and economic resilience.
The approach reflects the argument that commodities can be strategically leveraged to unlock liquidity and strengthen the capacity of an economy to withstand external shocks.
In Ghana’s case, the fact that gold is produced domestically provides a particular advantage.
The country can purchase the commodity using local currency and subsequently transform it into an internationally recognised reserve asset.
That mechanism can reduce the immediate need to source foreign exchange from the domestic market.
Broader macroeconomic impact
The reported impact of the DGPP extends beyond the accumulation of gold itself.
The programme has contributed to strengthening foreign-exchange reserves, reducing structural pressures on foreign-currency demand and improving the Bank of Ghana’s ability to intervene in the market.
Stronger reserves also provide a buffer against external shocks.
During periods of market stress, the central bank can draw on its reserve position to provide liquidity and manage excessive volatility.
The programme has also supported reserve diversification.
By increasing the share of gold within the reserve portfolio, Ghana reduces its dependence on conventional foreign-currency-denominated assets.
This can strengthen confidence in the country’s external position, particularly during periods of international financial uncertainty.
The cumulative effect is expected to support greater stability in the foreign-exchange market and reduce the vulnerability of the economy to sudden disruptions in international capital flows.
Credit profile and investor confidence
Dr Bawumia also linked the success of the gold-based initiatives to improvements in Ghana’s broader macroeconomic environment.
He said strong reserve accumulation, greater exchange-rate stability and easing inflation had contributed to improvements in Ghana’s credit profile.
Ghana’s sovereign rating moved from restrictive default to B- with a stable outlook in June 2025, according to his account.
The improvement in the credit profile, he argued, helped boost investor confidence and contributed to a more stable macroeconomic environment.
The significance of the reserve accumulation is therefore not confined to the Bank of Ghana’s balance sheet.
A stronger external position can influence perceptions of the country’s ability to meet external obligations, support the currency and withstand external shocks.
The cost and accountability question
Despite the strategic benefits, the gold programmes also raise an important policy question: how can Ghana maximise the benefits of using gold as a reserve asset without imposing disproportionate financial costs on the state?
The programme’s effectiveness depends not only on the amount of gold acquired but also on the mechanisms through which the gold is purchased, valued, processed and ultimately sold.
Under G4R, for example, gold is purchased and sold relatively quickly.
Consequently, the financial outcome depends on the acquisition price, disposal price and transaction costs rather than on a strategy of waiting for higher gold prices.
This makes pricing, fees, discounts and operational efficiency critical to the programme’s financial performance.
For policymakers, the challenge is therefore to preserve the strategic benefits of gold accumulation while ensuring that the mechanisms used to achieve those benefits are financially sustainable.
A response born from crisis
Dr Bawumia’s account places the origins of the DGPP firmly within the exceptional economic circumstances Ghana faced after losing access to international capital markets.
The country’s traditional ability to raise about US$3 billion annually from international markets had been disrupted.
Foreign-exchange availability tightened, the cedi came under severe pressure and concerns grew about Ghana’s ability to finance essential imports and maintain adequate external buffers.
The gold strategy emerged as an alternative response to that crisis.
Rather than waiting for international capital markets to reopen, the policy sought to use a resource Ghana already possessed in abundance.
The starting point was the apparent mismatch between Ghana’s status as a major global gold producer and the relatively small quantity of gold held in the Bank of Ghana’s reserves—about 8.7 tonnes, or 8.74 tonnes under the programme’s baseline.
The response was to bring domestic gold production more directly into the country’s reserve-management architecture.
From 8.74 Tonnes to strategic reserve asset
The ambition to double the Bank of Ghana’s gold reserves within five years illustrates the scale of the original policy objective.
The programme was intended to build a stronger reserve buffer, diversify Ghana’s external assets, create access to cheaper collateralised financing and reinforce confidence in the cedi and the wider economy.
Dr Bawumia’s claim that the country subsequently purchased about US$5 billion worth of gold within two years provides an indication of the scale at which the strategy was implemented.
The subsequent increase in the Bank of Ghana’s capacity to intervene in the foreign-exchange market—from an IMF-imposed maximum of US$80 million a month to at least US$1 billion a month after the restriction was removed—also illustrates the potential monetary-policy significance of stronger reserves.
The central argument is that Ghana’s gold resources can serve as more than an export commodity.
They can also provide a strategic financial asset that supports reserve accumulation, foreign-exchange liquidity and economic resilience.
A new model for Ghana’s commodity wealth
The gold-for-reserves and gold-for-oil initiatives ultimately represent an attempt to rethink the role of Ghana’s natural resources in economic management.
The programmes were conceived during a period of severe foreign-exchange scarcity, but their proponents argue that their relevance extends beyond the immediate crisis.
For a country that remains exposed to global commodity prices, international capital flows, exchange-rate pressures and external financing conditions, stronger domestic reserve buffers can provide an additional layer of protection.
The experience also demonstrates how Ghana’s gold production can be linked directly to monetary and financial policy.
The central challenge going forward will be maintaining the strategic benefits of the programmes while ensuring transparency, sound pricing, efficient operations and financial discipline.
The objective, therefore, is not simply to accumulate gold.
It is to ensure that Ghana’s gold wealth can be transformed into stronger reserves, greater foreign-exchange resilience, improved economic confidence and greater capacity to withstand external shocks without creating excessive financial costs for the state.
For Dr Bawumia, that was the essence of the original idea: an unconventional response born out of an extraordinary foreign-exchange crisis, built around a commodity Ghana already had in abundance.
