Economist Professor Godfred Alufar Bokpin has issued a stark warning against elevating the Ghana Gold Board (GoldBod) to a central pillar of Ghana’s macroeconomic stability, arguing that its influence extends beyond merely facilitating gold exchange transactions.
According to Professor Bokpin, GoldBod has undeniably played a crucial role in reducing gold smuggling and increasing foreign exchange reserves within Ghana. However, he contends that the broader gains in macroeconomic stability are intrinsically linked to fiscal and monetary policy, rather than the Gold Board’s direct contributions.
He stated, “You can see that the gap has narrowed significantly with the introduction of Gold Board. And I think that is a credit to Gold Board,” emphasizing the program’s influence on foreign exchange.
Bokpin highlighted that the NPP and NDC have identified challenges surrounding illegal mining, gold production, and the reporting of gold exports ahead of the 2024 elections, underscoring the need for oversight. The NPP proposed reducing the final withholding tax on gold exports, while the NDC opted for GoldBod as the primary entity responsible for buying and exporting gold, particularly from artisanal and small-scale miners.
Professor Bokpin pointed to the GoldBoard arrangement as a significant step in bringing foreign exchange into the country, a development previously lost due to smuggling. However, he expresses significant concern over the substantial financial losses incurred, which he believes must be considered in assessing the program’s overall impact.
He asserted that the GoldBoard’s role is not primarily a macroeconomic one, arguing that the responsibility for macroeconomic stability rests primarily with the Bank of Ghana and its fiscal and monetary authorities.
He stated, “In fact, that is not the job of the Gold Board. Macroeconomic stability comes from essentially fiscal and monetary policy, which is the Bank of Ghana and all of that,” emphasizing the importance of the Bank’s control over monetary policy.
Furthermore, he cited losses reported in connection with the domestic gold purchase program, stating that the overall cost could be significantly higher than previously discussed. For example, Evans, let me put this across, that if you adopt a holistic approach and look at the whole intervention we put in place, the losses actually exceed the $1.7 billion we are talking about here.
He also underscored the abolition of the 1.5% withholding tax on artisanal and small-scale gold production as another significant cost to the state.
He concluded that the fiscal implications become substantial when the value of gold exports from artisanal small-scale miners is taken into account. “I think that if you look at the benefit in terms of the macroeconomic stability and all of that, I will say that the benefit is quite substantial, but we must also recognise the cost, the huge cost associated with implementing this intervention,” he said.
Despite these concerns, Professor Bokpin acknowledged the program’s gains, recognizing the impact of Gold Board, but insisted that the substantial losses should not be overlooked.
He said, “I recognise the impact of Gold Board, and I celebrate the progress that they have made in terms of crowding in gold-related FX,” he said.
He further noted that the government, GoldBod, and the Bank of Ghana have recognised that the losses are unsustainable going forward, and that a plan is in place to reduce these losses, through the exit plan of the Bank of Ghana exiting this, through the Gold Board arrangement, to reduce these losses from about 17% or 14.5% to about 5% going forward. He stated that the reason I’m saying so is that the government itself, together with the Gold Board and the Bank of Ghana, recognises that these losses are not sustainable going forward.”
Professor Bokpin emphasized that an exit plan is being pursued to reduce the losses associated with the program.
Source: MyJoyOnline
