GoldBod operations imposing losses on BoG balance sheet – Prof Bokpin

Economist Professor Godfred Bokpin has cautioned that the GoldBod operations are draining funds from the Bank of Ghana's balance sheet, sparking worries about the actual cost of the government's domestic gold buying scheme. While GoldBod has stimulated foreign exchange inflows by acquiring gold from artisanal miners, Professor Bokpin argued that the program's scale was hasty, failing to account for the total costs involved.

The fiscal burden, he explained, doesn't immediately show up in public debt statistics due to the country's distinct debt accounting method. Instead, these expenses accrue within the central bank, potentially necessitating future government bailouts. Prof Bokpin expressed specific concern over the Bank of Ghana assuming the role of the program's risk absorber, thus leaving its balance sheet vulnerable to various losses.

He criticized the central bank's involvement as a residual risk claimant, exposing it to financial instability. The economist dismissed the IMF's earlier estimate of about US$214 million in losses, noting that GoldBod and the Bank of Ghana initially disputed the claim. The Bank of Ghana also questioned the estimate's validity, suggesting further verification after audits.

Despite these disagreements, Professor Bokpin acknowledged that GoldBod's actions have slightly narrowed the gap between reported gold exports and imports, partly due to its operations. However, he questioned whether this benefit justified the higher costs incurred. He advocated for more thorough analysis of the gold value chain and greater transparency to mitigate fiscal risks.

Professor Bokpin also called on the IMF to ensure the Bank of Ghana remains financially insulated from GoldBod's operations, emphasizing the importance of unveiling the program's true financial implications.