The International Monetary Fund (IMF) has disclosed that the Bank of Ghana’s Domestic Gold Purchase Programme (DGPP) generated losses of more than $1.7 billion in 2025, even as it served as the cornerstone for rebuilding the nation’s foreign exchange reserves and stabilizing the domestic currency.
In its 2026 Article IV Consultation and proposed Policy Coordination Instrument (PCI) report, the Fund revealed that the domestic gold buying framework grew to become the dominant source of foreign exchange inflows and reserve accumulation for the apex bank.
However, this rapid institutional expansion came at a steep financial price, creating a stark paradox between macroeconomic reserve strengthening and severe central bank balance sheet degradation.
“The significant scaling up of DGPP operations led to losses of over $1.7 billion (1.5% of GDP), almost entirely related to G4R doré purchases; this amounted to a loss of 17% of the value of doré gold sold by the BoG.”
International Monetary Fund (IMF)
The significant scaling up of DGPP activities produced financial deficits equivalent to 1.5% of Ghana’s gross domestic product (GDP), primarily linked to raw doré gold procurement under the state-backed Gold for Reserves (G4R) initiative.
Remarkably, while these operational deficits mounted, the program simultaneously engineered an eightfold expansion in Ghana’s gross international reserves since the inception of the Extended Credit Facility (ECF) supported program.
By the close of 2025, national gross reserves peaked at $11.9 billion providing nearly four months of import cover and substantially outperforming international benchmark targets agreed upon with multilateral lenders.
Operational Drivers and Foreign Exchange Mechanics
The financial hemorrhaging within the program was driven by structural friction across the domestic precious minerals supply chain and foreign exchange clearing mechanisms.
The IMF attributed the $1.7 billion losswhich represented “a loss of 17% of the value of doré gold sold by the BoG” to a combination of heavy intermediary service and assay fees paid to GoldBod, steep commercial discounts granted to international off-takers, and sharp accounting losses stemming from dual exchange-rate differentials.
Specifically, the central bank purchased local gold using prevailing forex bureau rates while recording transactions at the official Cedi reference rate, automatically generating an immediate accounting deficit upon entry.
Despite these operational friction costs, the extractive intervention delivered unprecedented liquidity to Ghana’s foreign exchange market.
Gold-related gross inflows into state vaults surged from $1.7 billion in 2023 to $12.7 billion in 2025, bolstered by $1.1 billion in net gains realized from international bullion sales.
This massive inflow was primarily fed by a rapid mobilization of supply from artisanal and small-scale mining (ASM) operators across the country.
Powered by this foreign exchange influx, the Bank of Ghana aggressively increased foreign currency sales to commercial banks from $1 billion in 2023 to $10.6 billion in 2025, alleviating systemic market illiquidity and underpinning a dramatic 41% nominal appreciation of the Cedi against the US dollar over the period.
Macroeconomic Impact and Central Bank Equity Erosion
While the central bank’s market intervention succeeded in halting currency depreciation, the underlying financial losses severely eroded Ghana’s macroeconomic balance sheet integrity.
The Fund emphasized that although a portion of the recorded $1.7 billion deficit reflected non-cash accounting valuation adjustments, it nevertheless constituted direct financial transfers to recipients of foreign exchange who accessed dollar liquidity at the subsidized reference rate.
Furthermore, the reported figures did not capture the substantial ongoing operational costs required for sterilizing the excess Cedi liquidity generated by buying vast quantities of local gold. Consequently, the Bank of Ghana’s total negative equity widened significantly, reaching 6.7% of GDP by the end of 2025.
This deep capital impairment presents long-term fiscal and monetary challenges for the economy. A central bank operating under severe negative equity faces compromised policy independence and heightened vulnerability to financial shocks.
To counteract these balance sheet distortions, the central bank must absorb ongoing sterilization costs, which risk crowding out domestic credit to the private sector or forcing the central treasury to eventually recapitalize the monetary authority.
Thus, while the gold-backed strategy successfully insulated the broader economy from external trade shocks, it effectively shifted private exchange-rate risk directly onto the balance sheet of the state.
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