By Magdalene Andoh
Ghana is saving hundreds of millions of dollars annually in borrowing costs by using gold exports, rather than expensive external loans, to shore up foreign exchange reserves, according to a new economic assessment of the Ghana Gold Board (GoldBod).
A technical report titled “Evaluating the Macroeconomic Effects of the Ghana Gold Board (GoldBod)” shows that GoldBod has become a key debt-avoidance tool, providing large volumes of non-debt foreign exchange that would otherwise have required costly international borrowing.
The report, dated January 4, 2026, was prepared by Prof. Festus Ebo Turkson, Peter Junior Dotse, and Prof. Agyapomaa Gyeke-Dako of the University of Ghana and the University of Ghana Business School.
Gold Replaces Costly Borrowing
According to the report, GoldBod-enabled artisanal and small-scale mining (ASM) gold exports reached US$10.8 billion in 2025. Had Ghana sought to mobilise equivalent foreign exchange through external borrowing, the country would have faced annual interest costs of between US$756 million and US$1.08 billion, based on prevailing international borrowing rates of 7–10 per cent.
By contrast, the inflows generated through GoldBod came without adding to Ghana’s debt stock, significantly easing pressure on public finances at a time of fiscal consolidation.
Even when focusing only on gold recovered from reduced smuggling, the economists estimate that Ghana avoided between US$266 million and US$380 million in annual interest costs—savings that recur every year the programme remains effective.
Smuggling Reduction Boosts FX Inflows
The report links these savings directly to GoldBod’s success in formalising the gold trade. Recorded ASM gold exports increased from 63.6 tonnes in 2024 to 103.0 tonnes in 2025, an additional 39.4 tonnes attributed largely to gold previously lost to smuggling.
Valued conservatively at US$96.5 million per tonne, the formalised gold generated approximately US$3.8 billion in new foreign exchange, strengthening Ghana’s external buffers without resorting to borrowing.
Wider Fiscal and Macroeconomic Benefits
Beyond interest savings, GoldBod-supported inflows helped stabilise the exchange rate, increase international reserves to an estimated US$11–12 billion, and lower the domestic cost of servicing external debt—estimated at GHS 6.2 billion.
The report also points to a reduced import bill valuation and easing inflationary pressures, driven by lower exchange-rate pass-through.
Losses Put in Context
While the Bank of Ghana has reported a US$214 million trading loss, the economists argue that this figure has been widely misunderstood. They explain that most of the loss reflects accounting translation effects, not cash losses, arising from differences between retail and interbank exchange rates.
The true economic cost of the programme is estimated at around 2.5 per cent of gold value, far below the borrowing costs Ghana would have incurred through external loans.
A Strategic Policy Choice
The authors conclude that GoldBod should be viewed not as a profit-seeking trading entity, but as a strategic macroeconomic stabilisation tool that replaces debt with domestic resource mobilisation.
They recommend sustaining price competitiveness to prevent a return of smuggling, strengthening governance and transparency, and explicitly budgeting for GoldBod’s policy costs as a quasi-fiscal expense.
Based on the evidence, the report finds that using gold instead of loans has delivered significant and recurring savings for Ghana, while reducing debt risks and strengthening economic stability.
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Source:
www.gbcghanaonline.com
