International Monetary Fund (IMF)A financial policy analyst has offered detailed insights into why the International Monetary Fund expressed concerns about Ghana’s Domestic Gold Purchasing Programme (DGPP), arguing the assessment stems from orthodox central banking principles rather than political considerations.
Dr. Hene Aku Kwapong, a Fellow at the Ghana Center for Democratic Development (CDD Ghana) and board member of Ecobank, maintains that the public must properly understand the IMF’s position, noting that the Fund’s assessment is grounded in basic central banking principles designed to safeguard global monetary stability.
According to the analyst, the IMF’s stance flows directly from its core mandate of protecting the international monetary system of which every central bank is a member. Any policy that could weaken a central bank’s balance sheet naturally attracts scrutiny from the Fund.
“The IMF is not a bank. It is primarily responsible for the overall stability of the world monetary system that every central bank is a member of. So any risk to that system is part of their mandate,” Dr. Kwapong explained in commentary on the programme. “What the IMF is doing here is not ideological nitpicking or technocratic box ticking. It is a fairly orthodox, and frankly predictable, exercise in central banking arithmetic.”
The International Monetary Fund disclosed in its fifth review report of Ghana’s Extended Credit Facility programme, released December 17, that operational costs from the Ghana Gold Board (GoldBod) and trading shortfalls drove losses under the Bank of Ghana (BoG) Gold for Reserves programme to US$214 million within the first nine months of 2025.
At the heart of the IMF’s assessment, Dr. Kwapong notes, is a question about whether the DGPP strengthens or weakens the Bank of Ghana’s financial position. While gold is a legitimate reserve asset, it comes with risks. Its price can swing sharply on global markets, and it may not always be easy to convert into cash during times of stress, posing liquidity challenges.
When too much of a central bank’s reserves are tied to a single commodity, flexibility reduces and valuation risks rise. The analyst stresses this is not a judgment against gold itself but a portfolio risk issue that any prudent financial manager would recognize.
“When a growing share of reserves is tied up in a single commodity, valuation risks rise and flexibility falls. This is not a moral judgment about gold. It is a portfolio argument that any risk manager would recognize,” Dr. Kwapong stated.
Another key concern relates to profitability and losses arising from quasi fiscal activities such as the DGPP. Central banks are not commercial traders or hedge funds, the analyst notes. When they incur losses while pursuing government objectives, those losses weaken the institution’s capital and over time undermine credibility.
The IMF’s view, according to Dr. Kwapong, is straightforward. If the government wants to run a commodity purchasing scheme, the fiscal costs should be clearly reflected in the national budget. Allowing such costs to sit quietly on the central bank’s books blurs accountability and risks eroding the Bank of Ghana’s independence.
“If the state wants to run a commodity purchasing scheme, the fiscal costs should sit transparently in the budget. Allowing them to be quietly absorbed by the central bank erodes capital, weakens credibility and ultimately compromises monetary policy independence,” he emphasized.
The IMF also examines whether strong systems exist to manage price volatility, liquidity pressures and operational risks linked to large scale gold transactions. The analyst warns that many well intended policies fail at this stage. Without proper hedging strategies, transparent accounting and strong internal controls, shocks from volatile global markets can quickly spill into a central bank’s finances.
Perhaps the biggest concern, according to Dr. Kwapong, is how the DGPP affects monetary policy and the foreign exchange market. When a central bank is simultaneously setting interest rates, managing liquidity, buying gold and influencing foreign exchange flows, conflicts can arise. Market signals become distorted, private actors may be crowded out and price discovery weakens.
Over time, this can make monetary policy less effective and harder to transmit through the economy. “When the same institution is setting policy rates, managing liquidity, buying gold and influencing FX flows, conflicts are no longer theoretical. Price discovery weakens, market depth suffers and policy transmission becomes noisy,” he argued.
The analyst emphasizes that the IMF is not saying the DGPP is fundamentally wrong. Rather, it is a caution. Without clear fiscal backing, strong risk management and firm institutional boundaries, the programme risks turning the Bank of Ghana into something it should not be.
“The underlying message is not that the DGPP is inherently misguided, but that without proper fiscal backing, risk management and institutional boundaries, it risks turning the Bank of Ghana into something it should never be: a development agency with a printing press,” he added.
Dr. Kwapong concludes that the IMF’s assessment reflects what it expects of any financially sound central bank, representing orthodox, predictable and globally accepted central banking arithmetic rather than ideology or hostility.
Both GoldBod and the Bank of Ghana have contested the IMF’s characterization of losses. GoldBod Chief Executive Officer Sammy Gyamfi stated the Board is set to declare an income surplus of not less than GHS 600 million for 2025 based on unaudited financial statements. The Bank of Ghana has described reported losses as speculative, arguing its 2025 audited financial statements have not yet been published.
Dr. Kwapong is founder and Managing Partner of The Songhai Group, a corporate development company, and founder of the Practice School, a management program focused on developing senior management for African companies. He holds degrees from the Massachusetts Institute of Technology (MIT) Sloan School of Management, where he studied Chemical and Nuclear Engineering, an MBA in Financial Engineering from MIT Sloan, and a PhD in Nonlinear Systems Dynamics from Columbia University.
He previously held senior positions at Exxon Mobil, Deutsche Bank, Microsoft Corporation, GE Capital and Royal Bank of Scotland. He also served as Senior Vice President and Treasurer of the New York City Economic Development Corporation.
Dr. Kwapong has been a consistent voice on Ghana’s institutional challenges, recently calling for abolition of the Public Procurement Authority’s current model and advocating for structural resets in the country’s land administration system. He has also written extensively on the need for discipline in governance and working institutions as prerequisites for private sector growth.