The Bank of Ghana must concentrate on maintaining price stability and avoid lending to government agencies, the International Monetary Fund’s Resident Representative to Ghana, Dr Adrian Alter, has said.
Dr Alter said the central bank should not take on responsibilities that belong to the fiscal side of the economy, warning that such activities could weaken its balance sheet and undermine its main objective.
He was speaking about losses incurred by the Ghana Gold Board (GOLDBOD) during an interview with Channel One TV on Monday, August 24.
Dr Alter said the Bank of Ghana could raise capital through financial markets and commercial banks if funding was required, rather than providing loans to government entities.
He also acknowledged the importance of gold to Ghana’s economy, saying the commodity had contributed significantly to export proceeds. He added that the stabilisation of the cedi had helped the country rebuild its foreign reserves.
However, he said the domestic gold purchase programme required stronger oversight, transparency and reporting, as well as closer attention to the costs it generated.
“The lessons from the domestic gold purchase programme: we also need to be very careful about governance, transparency, reporting and care about the cost incurred by the programme.
“The IMF analysis basically shows that the DGPP, throughout its history, has led to significant losses to the BoG, which ended up with equity of negative 7% at the end of 2025; part of that was driven by DGPP,” he said.
The IMF representative said the central bank’s involvement in the programme amounted to fiscal activity and could damage its financial position.
“The main point here is that the central bank, it cannot be involved in these activities because it is fiscal activity; its balance sheet is deteriorating, which basically can interfere with its primary mandate, which is price stability.
“How it can interfere is basically that the central bank has operational costs, it has costs for sterilisation, and if it decides that this is too expensive, then it affects its balance sheet. We want them to maintain price stability as their primary objective.”
Dr Alter also stressed the importance of preserving the independence of the Bank of Ghana.
He said an independent central bank was essential to prevent what he described as fiscal dominance, particularly where a central bank lends directly to government bodies.
“When you talk about fiscal dominance, basically lending to the government, you need an independent central bank; the BoG should not lend to government entities; they should get financing from the markets, from the commercial banks.
“Basically, the operations have moved from BoG to GOLDBOD, both buying and selling gold and therefore the government, together with GOLDBOD, we need to think thoroughly about the financing model, about how to minimise the cost and at the same time maximise the benefits of this programme. “
The comments come as attention remains focused on the financial impact of the domestic gold purchase programme and the way its operations are funded. Dr Alter said the government and GOLDBOD needed to assess the financing structure carefully to reduce costs while securing the programme’s benefits.
