A finance professor has raised concerns about Ghana’s aggressive push to build up gold-backed reserves, warning that the policy could tie up critical funds needed for immediate economic development.
Speaking on PM Express on Joy News, William Kwasi Preprah cautioned that while strengthening reserves is a prudent economic safeguard, the scale of the current target may come at a significant opportunity cost.
Ghana is seeking to increase its reserve cover to the equivalent of 15 months of imports under the Ghana Accelerated National Reserve Accumulation Policy, a strategy that relies heavily on gold purchases. Prof. Preprah questioned whether locking substantial financial resources into gold accumulation could slow growth by diverting funds from sectors such as education, healthcare, and infrastructure.
“Reserves are important for stability,” he noted, “but we must ask what we are giving up in the process.” According to him, committing large sums to reserve assets particularly gold may limit the government’s flexibility to address pressing development needs.
Under the policy framework, the Ghana Gold Board is tasked with acquiring gold domestically to help strengthen the country’s external buffers. Proponents argue that the move will reduce dependence on foreign borrowing, shield the economy from global shocks, and position Ghana more securely in volatile financial markets.
However, Prof. Preprah suggested that targeting a 15-month import cover may be excessive, pointing out that many advanced economies maintain lower reserve levels. He cited research indicating that aggressive reserve accumulation can carry opportunity costs equivalent to about one percent of GDP a considerable sacrifice for a developing economy.
The debate adds to broader discussions about how best to balance macroeconomic stability with sustainable growth. While supporters of the gold-backed strategy see it as a long-term investment in economic resilience, critics warn that tying up capital in reserves could constrain Ghana’s immediate development agenda.
As policymakers press ahead with the reserve expansion plan, the conversation is likely to intensify over how to strike the right balance between safeguarding the future and financing growth today.