The IFS has urged govt to examine the programme’s influence on money supply growth since 2022
Concerns have mounted over the Bank of Ghana (BoG) Gold Purchase Programme’s (GPP) role in the country’s rising monetary growth.
Therefore, the Institute for Fiscal Studies (IFS) has urged policymakers to assess whether the programme, initially designed to shore up foreign reserves and stabilise the cedi, may be inadvertently contributing to excess liquidity.
Dr. Said Boakye – a senior research fellow at IFS – recommends the new government critically examine the programme’s influence on money supply growth since 2022 and determine whether adjustments are needed to ensure macroeconomic stability.
“If liquidity growth is found to be excessive and linked to the programme, then a policy decision must be made on whether to modify or discontinue it in its current form,” he added.
Monetary expansion has been a persistent challenge in recent years. Broad money supply (M2) growth, which stood at 12 percent in 2021, surged to 27.8 percent in 2022 and further accelerated to 37.2 percent in 2023 before slightly easing to 33.7 percent in 2024.
This expansion, coupled with a prolonged period of high inflation, has raised concerns about the sustainability of the country’s macroeconomic trajectory.
The key question remains whether the GPP is a necessary stabilising measure or a driver of the country’s liquidity expansion. IFS insists that a rigorous evaluation is needed to determine its broader economic effects.
If the programme is found to be contributing significantly in monetary expansion, policymakers may need to reassess its scale or structure. The Cedi’s depreciation has also remained a source of instability, with the local currency losing 19.2 percent of its value against the US dollar in 2024.
The IFS argues that excessive fiscal deficits, driven by high debt service costs, remain at the heart of the country’s macroeconomic challenges.
The country’s debt restructuring efforts have provided temporary relief, but concerns persist about long-term fiscal sustainability.