By September 2026, Ghana’s cedi had lost 9.5 percent of its value against the US dollar in real bilateral terms for the year so far. The nominal trade-weighted value of the cedi also dropped. At the same time, Ghana’s international reserves fell sharply—from covering 5.7 months of imports at the start of the year to just 4.2 months in August, a loss of $3.09 billion.
This decline comes after a period of notable economic stabilisation in 2025. Inflation fell, the cedi gained strength, fiscal conditions improved, and reserves increased. But the external environment has become more complicated in 2026 despite those earlier gains.
One reason for this shift lies in the Domestic Gold Purchase Programme (DGPP), launched after Ghana’s 2022 economic crisis. The programme, sometimes called the Bawumia Doctrine after Vice President Mahamudu Bawumia, involved the government buying gold from local producers in cedis. The gold was then exported or converted into foreign reserves, creating foreign exchange to support the currency and build reserves.
In 2025, the DGPP helped export $10.9 billion worth of artisanal gold, about 9.5 percent of GDP. This coincided with significant macroeconomic stabilisation and reserve growth. But the programme also caused heavy financial losses. The IMF estimates the DGPP cost Ghana GH¢22 billion, or 1.5 percent of GDP, in 2025.
The problem was that the Bank of Ghana carried the financial risks of the programme, essentially acting as a quasi-fiscal commercial operator. From July 2026, responsibility for domestic gold purchases shifted to GoldBod, a state agency. The central bank stepped back, ending its quasi-fiscal financing role.
GoldBod now depends on commercial banks and private buyers to finance gold purchases. This change separates monetary policy from gold buying but creates a new challenge: the ability to finance the system consistently.
The IMF says this reform removes the Bank of Ghana’s exposure to incremental quasi-fiscal risks. It changes how gold supports foreign exchange and reserves. The question now is whether this new model can reliably generate enough foreign exchange to stabilise the cedi and build reserves without recreating old financial risks.
In August 2026, GoldBod reported producing $1.315 billion in foreign exchange under the new system. About $668 million went directly to commercial banks, and $647 million was made available to the Bank of Ghana for reserves. That suggests the model has potential but one month’s figures do not prove long-term success.
The new structure links domestic gold production, GoldBod purchases, gold exports, foreign exchange, commercial banks, reserves, and cedi stability into one chain. If any link weakens—such as financing shortages, lower gold production, or export delays—the whole system could strain.
Recent irregularities in gold export flows highlight this risk. They do not prove the new system is failing but show how dependent the currency and reserves have become on smooth gold operations. Resilience will be tested when market conditions tighten.
It is also important to remember that Ghana’s reserves have not simply fallen in 2026. The bigger question is whether the country can build substantial international reserves over the medium term through this gold-based strategy.
Ghana’s strategy relies on the new Gold–FX–Reserve triangle to provide foreign exchange and keep the cedi stable. But the strain on reserves and the cedi’s depreciation so far in 2026 suggest this system is under pressure. How it performs as conditions change will matter for Ghana’s external economic strength in the months ahead.
According to Joy Online.
