First Deputy Governor of the Bank of Ghana (BoG), Dr. Zakari Mumuni, has noted that the Domestic Gold Purchase Programme (DGPP) launched in 2021 has impacted the economy positively, with strong reserve accumulation, stability in the exchange rate, and easing inflation.

Speaking at the Cnverge ’25 – Africa’s Premier Trade Banking Thought Impact Event held last week, Dr. Zakari Mumuni also noted that 86.77 tonnes have been sold for FX to bolster reserves and the bank’s physical gold holdings have increased to 32.99 tonnes from 8.74 tonnes.

The Bank of Ghana (BoG), as of June 2025, purchased 145.95 tonnes of gold since the inception of the DGPP. “27.63 tonnes of gold was utilised in the settlement of 1.95 million Metric Tons of petroleum products under the G4O Initiative,” he said.

According to the First Deputy Governor, this helped to improve the country’s credit profile from restrictive default to B- with a stable outlook in June 2025, boosting investor confidence. “All these developments have contributed to a stable macroeconomic environment,

which is of critical interest to your work,” he added.

Two months ago, Fitch upgraded Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from ‘Restricted Default’ to ‘B-’ with a Stable Outlook. Fitch credited the upgrade to the country's successful restructuring of $13.1 billion in Eurobond debt, steady fiscal consolidation, and the country’s improving macroeconomic outlook.

The agency also highlighted falling inflation, a strengthening cedi, and a rebound in investor confidence as key indicators of Ghana’s economic turnaround.

Basis for DGPP

Ghana has mined gold for over three centuries and, for the most part, exported all the gold. In 2019, Ghana ranked number one in Africa and the 7th top gold producer worldwide. However, while central banks globally acquired 670 tonnes of gold in 2019 to diversify and hedge their reserves, Ghana added nothing to its own gold reserves.

Also, gold accounted for nearly 56 percent of Ghana’s total export earnings, and yet, until 2022, gold had not featured much as an asset class in Ghana’s reserve portfolio or contributed much to reserve accumulation. Rather, there was heavy reliance on traditional sources of funds to the country’s foreign exchange reserves, such as inflows from cocoa syndicated loans and Eurobonds.

Faced with these facts, Ghana undertook feasibility studies on countries with domestic gold purchase programmes (including the Bank of the Philippines, Central Bank of Ecuador, South African Reserve Bank, Turkey Central Bank, Bank of Mongolia, etc.).

Consequently, Ghana’s Domestic Gold Purchase Programme (DGPP) was launched in June 2021 to, among other things, increase the Bank’s gold reserves by 100% within five years—which at the time was 8.74 tonnes, diversify the Bank’s FX reserve portfolio, leverage the Bank’s gold holdings to raise cheaper short-term and collateralized financing, and finally, build confidence with stronger reserves and a stable currency.

After the successful implementation of the DGPP, the Bank extended the strategy to the Gold for Oil (G4O) initiative in 2022. This was a policy solution to moderate the adverse effects of escalating domestic ex-pump petroleum prices, which surged as high as 230% in one year, as international crude oil prices rose sharply. Also, petroleum imports topped commodity imports into the country, exerting significant FX pressures on the limited reserve buffers.

The G4O intervention, therefore, leveraged the DGPP framework to provide FX and gold to support the importation of petroleum products through government-to-government arrangements. The G4O intervention helped secure petroleum imports at competitive prices, easing pressure on the forex market and stabilizing ex-pump petroleum prices. This moderated the volatile ex-pump price pass-through effects on transport costs, and in turn, inflation.

Months ago, the Bank of Ghana (BoG) revealed that it lost a total of GH¢2.14 billion from the now-ended Gold for Oil (G4O) Programme, which was implemented by the erstwhile government.

This was revealed in a response from the central bank following a formal request made by Kwadwo Poku, a member of the New Patriotic Party (NPP) and an energy analyst. He requested it while invoking the country’s Right to Information laws.

In the bank’s official reply (dated July 2025), they explained that the losses happened over two years, i.e., spanning between the 2023-2024 fiscal year. In 2023, the country lost GH¢320 million, and a further GH¢1.82 billion was lost in 2024, totalling GH¢2.14 billion.

The Bank of Ghana officially announced the cancellation of the programme on March 13, 2025, citing severe financial losses totalling over GH¢2 billion since its launch. Before that, there were hints of a gradual wind-down as early as November 28, 2023, when former Bank of Ghana Governor Ernest Addison described it as a crisis-era intervention that had served its purpose.

The Bank of Ghana attributed the losses to two major components: gold transactions and petroleum trading. On gold transactions, the report says that the Bank of Ghana’s unrealistic exchange rate caused the losses. It said that it lost about GH¢1.80 billion, mainly because the exchange rate used by the bank was different from the rate on the gold market.

Also, on the losses recorded from petrol trading, from which they lost GH¢340 million, the report mentioned that under the G4O, BoG purchased large volumes of fuel just before global oil prices fell. When the prices dropped, the fuel they had stocked up became less valuable.

Despite the losses, the report acknowledged the G4O initiative. According to BoG, the programme was not a total failure but made some returns before it dwindled in the later years, citing its positive impact during the first year of implementation in 2023. It noted that the programme helped reduce demand for US dollars from Bulk Oil Distributors (BDCs), alleviating pressure on the interbank foreign exchange market.

G40 saved the country by preventing an estimated $1.66 billion in additional FX demand, which would have been required to deliver 56 cargoes totalling over 1.84 million metric tonnes of petroleum products by December 2024. Also, the initiative spurred competition in the fuel supply market. Prior to G4O, petroleum premiums ranged between $150 and $170 per metric tonne. These figures dropped to between $50 and $80 due to the programme, resulting in lower ex-pump fuel prices.

The central bank also highlighted that the removal of forward exchange rate pricing under the G4O programme helped stabilise domestic fuel prices. Aside from the losses the programme made, which were cited as part of the reasons for its discontinuation, the Bank of Ghana also explained that the G4O programme was financially unsustainable and did not align with the International Monetary Fund’s (IMF) fiscal recommendations.

Going forward, according to the central bank, it will refocus on its core mandate, with renewed emphasis on the Domestic Gold Purchase Programme to build foreign reserves organically.