By Jibril Abdul Mumuni
Accra, Aug. 24, GNA – Dr Adu Owusu Sarkodie, an economist, has said that losses under Ghana’s Domestic Gold Purchasing Programme (DGPP) were anticipated because the initiative was designed around incentives to build reserves and curb gold smuggling.
Speaking during a discussion on the programme, he explained that the DGPP was established to increase Ghana’s reserve holdings and provide a stronger buffer to support the local currency when necessary.
Dr Sarkodie said another key objective was to discourage gold smuggling by encouraging artisanal and small-scale miners to sell their gold through official channels rather than exporting it through unofficial routes.
He said the Government and the Bank of Ghana (BoG) introduced incentives, including attractive pricing arrangements, favourable exchange rates and tax concessions for small-scale miners, to encourage their participation in the programme.
Dr Sarkodie explained that the removal of the 1.5 per cent withholding tax on small-scale mining activities and the provision of exchange rate advantages were among the measures intended to encourage miners to sell their gold through official channels.
He said such incentives inevitably came at a cost and that some level of financial loss was therefore built into the structure of the programme from its inception.
The issue has emerged amid debate over the cost and losses incurred by the BoG under the DGPP.
The International Monetary Fund (IMF) has said the central bank incurred losses estimated at GH¢22 billion under the programme, which it attributed to the scaling up of the initiative and exchange rate differentials associated with its operations.
Dr Sarkodie said the DGPP was fundamentally a BoG programme and, therefore, its financial implications were reflected in the central bank’s audited financial statements.
He explained that figures associated with the programme were contained in the BoG’s audited accounts rather than those of the Ghana Gold Board.
While defending the rationale for the programme, Dr Sarkodie said the focus should not be on whether losses occurred but on how the costs could be reduced while maintaining the programme’s objectives.
He said policymakers should seek to achieve the programme’s objectives at the lowest possible cost, adding that opportunities existed to improve efficiency and reduce losses.
Dr Sarkodie suggested reviewing cost components such as service charges, exchange rate differentials and tax incentives to determine whether reserves could be accumulated more efficiently.
He said governments and central banks routinely faced the challenge of balancing policy objectives with associated costs and emphasised the need for optimisation in economic decision-making.
Dr Sarkodie suggested that a more efficient design could enable Ghana to continue to build reserves, tackle gold smuggling and reduce the financial burden associated with the programme.
GNA
Edited by Kenneth Sackey
Reporter: Jibril Abdul Mumuni
Email: [email protected]