IMF’s Preference for Dollar Reserves Over Gold Reserves Questioned By Joe Jackson, Dr Theo Acheampong
CEO of Dalex Finance, Joe Jackson, and Dr Theo Acheampong, an Economist and Political Risk Analyst have expressed their disagreement with the IMF’s caution against Ghana holding up too much gold reserves as part of the country’s broader economic strategy to boost reserves and mitigate the chronic depreciation of the Cedi.
They argue that central banks of developed nations such as the US and England have significant amounts of bullion (gold) as reserves.
The IMF made the caution in its review of Ghana’s current $3bn programme with the Bretton Wood Institution.
The IMF has been a strong advocate of Ghana shoring up its reserves however, the IMF prefers an increment in dollar reserves against gold reserves.
But speaking during the NorvanReports, Economic Governance Platform, and BudgIT Ghana X Space Discussion on the topic, “Ghana’s Gold For Forex Strategy: Implications For Economic Stability And The Cedi,” on Sunday, August 18, 2024, Mr Jackson averred gold has outperformed the dollar by over 105% in the last 8 years with the previous metal recently crossing the $2,500 mark.
“In the last 8 years gold has outperformed the dollar by over 105%, so by holding more gold as our reserves, we will potentially be doing better than holding dollars as reserves.
“In December 2016, gold was at $1,146 per ounce and now the precious metal has crossed the $2,500 per ounce threshold. So I am not sure about the IMF’s caution against holding gold as reserves,” he remarked.
“Ghana’s gold endowments are estimated to be between $5 trillion to $10 trillion in value, and this could significantly boost our economy and cedi when we hold our reserves in gold,” he added.
Echoing the sentiments expressed by Mr Jackson, Dr Theo Acheampong remarked, “It’s a reality that anytime there are challenges with the cedi, the BoG has to burn its reserves to mitigate the run on the currency and support the currency. Hence when you have more gold, then you are able to fight or stabilize the currency, especially during a period of crisis.”
“I support calls to retain more of the gold we produce in Ghana and buying the gold to build reserves to bolster the cedi,” he added.
According to the Governor of the Bank of Ghana, Dr Ernest Addison, the innovative Gold for Forex (reserves) programme has been a game changer in the Central Bank’s foreign exchange management strategies.
The Gold for Forex (reserves) programme helped the BoG last year to raise $1 billion to shore up the Cedi.
“This year alone, we have been ahead of our reserve target by almost $1 billion. So, we plan to continue with the Domestic Gold for Reserves Programme. And that should help in terms of building reserves going into 2024,” said the Governor according to the Ghanaian Times.
The IMF ,has nothing good for us as a country. They serve their interests to make Africa impoverish. The good course by the Bank of Ghana should be sustained. The G7 who formed the IMF ,would not want any competitions.They want us to remain down trodened, our economy crashed. The neocolonism agenda is wide on spot.We have to do what is right for us at all times .The BOG and the government should not allow themselves to be in bed with the killer institution.
I support the argument of Mr Joshua Edem and that of Mr. Jackson. the target of IMF is slow growth of African countries by increasing our debts so that all our resources will be channeled towards serving those debt. so Bank of Ghana should not relent on their efforts in ensuring we create more gold reserve rather the evil dollar the west use to recognised Africa.
Anyone who thinks the IMF ( INTENTIONALLY MORE FAILURE ) is here to help Africa excel and develop is terribly blind and misguided! As a matter of come around I have a bridge to sell you!! It was never created to give and or create financial independence but rather the opposite, financial dependence and slavery!! Until Africans start having the mindset that they need us more than we needs them we will, as fools, continue to seek to be the bridesmaids of the likes of the IMF! Their intentions are CLEARLY seen in this asinine statement about their preference! To hell with them! Their goal is not stability on the continent but rather the opposite. With stability, there would be no need for them, they would cease to exist, period. Tell Britain to return all the gold that was stolen from us and at the same time they can go ahead and base their reserves on the backs of the dollar. Ask the US to get rid of its stockpile of gold while you are at it!! Fight fire with fire! Not only should Ghana have a stockpile of gold to stabilize the Cedi, they should do it at the rate of 10 times more than they planned! It’s high time someone tells these agencies “kiss my ass!”
We need a balance. Some gold. Some major currencies. Even other precious minerals.
The objective is to derisk the reserves so the wider the spread of instruments, the better.
Absolutely a fantastic economic decision. Given the long-term performances of gold to dollar it is an indebatable fact to store the currency backup of the cedi in gold rather than the often depreciating dollar. Trust this imperialist entity to dissuade our managers of the economy from taking any decision that will wean is from their draconian fiscal policies which has a long-term agenda of cushioning the developed economies by the indebtedness of the poor countries…
the value of Money should never change. if the Money that we earn does not have any value, then it is not Money. the fact that the value of our currency have depreciated from 2.00 in 1981 to 160000 in 2024 meant the managers of the Money are adjusting measures and tampering with scale of Money to cheat.
1. Ghana holding up gold reserves as part of the country’s broader economic strategy to boost reserves is where the decision to do so stops.
2. Using that gold stock pilling process to mitigate the chronic depreciation of the Cedi is not what the focus should be.
3. The focus has to be on creative ways in which Central Bank of Ghana funds or finances a state gold mining corporation to stockpile Ghana’s Gold and resolve countrywide responsible gold mining in that process to mitigate the negative global effect. There’s a whole value chain to this and a deliberate effort to actualise this is a must.
4. As a country, Ghana is blessed with it’s sovereignty and a currency that is not used anywhere else and this fact must be the basis for new monetary policies by BoG. There’s more to this including links to trading Gold Certificates only on Ghana’s Stock Exchange.
This time the policy is right.The cedi must be anchored to the gold rather than the dollar in order to stabilise the exchange rate and fight inflation.