Joe Jackson Endorses Gold for Forex Initiative, Citing Cedi Stability and Potential Macroeconomic Gains
CEO of Dalex Finance, Joe Jackson, has endorsed Ghana’s “Gold for Forex” programme, asserting that it holds substantial potential to stabilize the cedi and strengthen the country’s foreign reserves if implemented effectively and void of corruption.
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,” Mr Jackson underscored the macroeconomic advantages of the initiative, which he believes could be a game-changer for Ghana’s economy.
“The Gold for oil concept brings significant benefits to Ghana because of the challenges facing the country and if implemented properly will deliver stability in the pricing of the cedi and growth of foreign reserves, and these are two major macroeconomic factors tgat are important to the growth of Ghana,” he quipped.
Mr Jackson further highlighted a critical flaw in Ghana’s current economic framework which is the low retention of foreign exchange from exports.
He noted that only 17% of export earnings remain in the domestic economy, a stark contrast to countries like Nigeria and Botswana, which retain over 50%.
Mr Jackson argued that if Ghana could retain 100% of the foreign exchange generated from its gold exports, it would play a pivotal role in stabilizing the cedi.
“When we ship $100 of exports, too little of it is retained in the economy, only 17% of it comes to Ghana and that’s our problem. Nigeria is, however, able to retain over 50%, Botswana is also able to retain over 50%,” he asserted.
“If we are able to ship $100 of gold and able to retain 100% of the foreign exchange earnings, that will help maintain the stability of the Cedi,” he added.
Mr Jackson speaking further during the X Space Discussion, also emphasized the performance of gold as an asset, noting that it has outperformed the U.S. dollar by over 105% in the past eight years, with prices recently surpassing $2,500 per ounce.
Asserting that increasing gold holdings in the country’s reserves could provide greater financial security than holding dollars, offering a strategic advantage for Ghana’s economic stability.
“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.
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.
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