Recent public debate over the decline in Ghana’s gold holdings from 37.1 tonnes in September to 18.6 tonnes by December 2025 has understandably raised concern. Gold holds both symbolic and strategic importance in Ghana’s economic history, and any reduction in official holdings can easily be perceived as a loss of national wealth.
However, the explanation offered by the Bank of Ghana (BoG) points to something far less alarming and far more conventional: a deliberate reserve portfolio rebalancing, consistent with international central banking practice rather than an act of distress.
At its peak, gold accounted for more than 40 percent of Ghana’s total international reserves. While gold remains a valuable reserve asset, such a level of concentration is unusually high by global standards. Most peer central banks maintain gold exposure within a 20–25 percent range, precisely to avoid excessive reliance on a single asset and to enhance reserve flexibility.
From a reserve-management perspective, gold has some limitations. It is relatively illiquid during periods of financial stress, when foreign exchange is urgently needed to stabilise markets or finance essential imports. Gold prices are also volatile, exposing reserves to valuation swings. Moreover, gold is non-yielding, unless actively lent or swapped, offering limited income compared to other reserve assets.
Foreign exchange reserves, by contrast, play a more direct stabilising role in macroeconomic management. They support external debt servicing, facilitate critical imports, generate interest income, and provide immediate liquidity during balance-of-payments pressures. Converting a portion of gold holdings into foreign exchange therefore improves liquidity, diversification, and return generation, three core objectives of prudent reserve management.
Seen in this light, the Bank of Ghana’s decision reflects risk management, not financial distress.
That said, sound economics alone is not enough. In an economy like Ghana’s, movements in international reserves carry powerful signals. Without clear communication, a policy decision rooted in prudence can easily be misinterpreted as a sign of fiscal weakness or external vulnerability.
Reserve rebalancing must therefore be justified within a clear framework built around portfolio diversification, liquidity needs, risk reduction, and return optimisation. Encouragingly, the BoG has already emphasised that this adjustment represents a change in the composition of reserves rather than a depletion of assets, and that it is guided by international best practice rather than short-term market speculation.
Still, greater transparency would help. Publishing a target range for gold holdings, outlining the broad foreign exchange asset mix, and presenting simple “before-and-after” illustrations of reserve composition would strengthen public understanding and confidence. Transparency, in this context, is not a weakness; it is a stabilising force.
The risks, however, cannot be ignored. Reserve adjustments in Ghana often trigger market speculation, exchange-rate pressure, and political controversy. Timing also matters: if gold prices rise after divestment, critics may accuse the central bank of selling too early, even though central banks are not commodity traders. There are also reinvestment risks associated with foreign exchange assets, including interest-rate, currency, and sovereign counterparty risks.
Ultimately, the success of reserve rebalancing depends on discipline, gradual implementation, and insulation from political pressures, supported by fiscal discipline and export diversification.
This is not a fire sale of Ghana’s gold. It is a central-bank portfolio decision, aimed at strengthening resilience in an uncertain global environment. But in Ghana’s political economy, sound policy must be matched with clear explanation. When economics is right and communication is strong, credibility is earned and preserved.
By Daniel Osabutey, PhD
Senior Lecturer with the Faculty of Business, Accra Technical University
