The Impact of the Bank of Ghana's Gold Trading Withdrawal on the Economy
Jan 15
3 min read
Updated: Aug 17
Understanding the Structural Reform
The Bank of Ghana’s decision to withdraw from direct gold trading and transfer the program fully to the Ghana Gold Board marks a significant structural reform in the country’s financial architecture. This move is expected to strengthen transparency, sustain foreign exchange buffers, and reinforce investor confidence. Ultimately, it aims to support a more stable exchange rate for the cedi against the US dollar.
The cedi’s performance in 2025 has been remarkable, appreciating by more than 32 percent year-to-date as of November. This appreciation has been buoyed by the initial gold purchase program and IMF support. The new institutional framework seeks to consolidate these gains.
The Complex Trade-offs of Currency Appreciation
Yet, the appreciation of the currency has revealed complex trade-offs. While a stronger cedi has reduced the burden of public debt servicing, it has not benefited everyone equally. Headline inflation has fallen below 10 percent by year-end, but the advantages have not translated evenly across the economy.
Importers have sourced goods at lower international prices but struggled to sell in domestic markets. Purchasing power remains weak, and retail prices have not adjusted downward. Exporters face even greater challenges. The sharp appreciation of the cedi has made Ghanaian products significantly more expensive abroad. This has eroded competitiveness, forcing many firms to delay transactions, renegotiate contracts, or suspend operations altogether. The contraction in export activity has reduced foreign exchange inflows, tightening liquidity and paradoxically amplifying pressure on the very currency whose strength was celebrated.
Challenges for Non-Traditional Exporters
This dynamic has been particularly damaging for non-traditional exporters, including SMEs. These businesses operate on thinner margins and rely heavily on predictable exchange rates. The official inflation rate fell to 6.3 percent in November, the lowest since 2021. However, businesses continue to grapple with elevated production costs in energy, labor, and certain sub-sectors such as mining.
Importers also face difficulties accessing foreign exchange through official banking channels. Many are forced to resort to more expensive black-market sources. Customs duties have failed to adjust in line with the cedi’s gains. Exporters under programs such as AGOA encounter additional burdens from new tariffs, compounding the strain.
The Disconnect Between Macroeconomic Stability and Microeconomic Relief
The broader implication is clear: macroeconomic stability does not automatically translate into microeconomic relief. A strong currency may ease debt servicing and inflationary pressures. However, without structural reforms to enhance competitiveness, diversify exports, and reduce reliance on external commodity cycles, the gains remain fragile.
Organic Trade and Investments (OTI)’s Research and Development department observed that in 2025, Ghana experienced a distinctive economic paradox. Despite a sharp decline in inflation and a strengthening cedi, the Consumer Price Index (CPI) showed that the average cost of goods continued to rise. Even with the cedi appreciating by more than 30 percent, the CPI remained near its all-time high of 260.5 points. This persistence reflects the reality that businesses often maintain elevated prices to recover earlier losses or because operational costs—such as utilities and transport—did not decline at the same pace as the currency.
Future Expectations for Ghana's Economy
Ghana’s reliance on high global gold and cocoa prices, alongside IMF-driven investor sentiment, underscores this vulnerability. Analysts expect gold prices to remain elevated in 2026, with forecasts ranging between $4,300 and $4,900 per ounce. Meanwhile, cocoa prices are projected to decline from recent highs but stay above historical averages, between $6,800 and $7,200 per ton.
For Ghanaian exporters, particularly SMEs, the path forward requires more than currency strength. It demands policies that prioritize non-price competitiveness through quality, value addition, and diversification. The Importers and Exporters Association has repeatedly called for government intervention to stabilize the exchange rate at more manageable levels and address structural bottlenecks in logistics and energy.
A Call for Structural Change
Ultimately, Ghana must transition from an import-dependent economy to one anchored in production and export trade. The goal is to leverage the cedi as a transactional currency within West Africa. Only then can the promise of a strong currency translate into tangible benefits for businesses and households alike.
“Only through structural change can we ensure that the strength of the cedi benefits all sectors of the economy,” stated Esthy Ama Asante, CEO and Head of Business Development at Organic Trade and Investments (OTI).
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