BoG Gold reserve rebalancing as prudent risk-management strategy - Economist
3rd February 2026
Dr Daniel Osabutey, a Senior Lecturer at Accra Technical University, has defended the Bank of Ghana’s recent decision to rebalance its international reserves, describing the move as a calculated risk-management strategy rather than an indication of economic weakness.
In an analytical commentary responding to public debate over the reduction in Ghana’s gold reserves—from 37.1 tonnes in September to 18.6 tonnes by December 2025—Dr Osabutey said the decision aligns with accepted global central banking practices.
He noted that at its peak, gold made up more than 40 per cent of Ghana’s total international reserves, a proportion he described as exceptionally high compared to similar economies. According to him, most central banks typically maintain gold holdings within a 20 to 25 per cent range to ensure flexibility in reserve management.
“Gold is an important reserve asset, but excessive concentration increases exposure to price volatility and limits immediate liquidity,” he explained.
Dr Osabutey pointed out that while gold is widely viewed as a safe-haven asset, it is relatively illiquid during financial crises and does not generate income unless actively deployed through lending or swaps. In contrast, foreign exchange reserves are essential for servicing external debt, financing critical imports, earning interest income, and stabilising markets during balance-of-payments challenges.
He argued that converting part of the gold holdings into foreign exchange enhances liquidity, diversification and returns—key pillars of sound reserve management.
“Improving liquidity, diversification and yield generation is at the heart of prudent reserve management, and this rebalancing supports those objectives,” he said.
However, Dr Osabutey cautioned that changes to reserve composition can send strong psychological signals to markets and the public, warning that inadequate communication could cause well-intentioned policies to be misconstrued as signs of economic distress.
To strengthen transparency and public confidence, he recommended that the Bank of Ghana clearly communicate its reserve strategy by publishing a target range for gold holdings, outlining the composition of its foreign exchange assets, and providing clear explanations of reserve allocations before and after policy changes.
The analysis also acknowledged potential risks, including market speculation, exchange-rate pressures and the possibility of selling gold before future price increases. Dr Osabutey further highlighted reinvestment risks associated with foreign exchange assets, such as interest-rate volatility and sovereign counterparty exposure.
He concluded that the reserve rebalancing was “not a fire sale” but a deliberate move to reinforce economic resilience in an uncertain global environment.
“For this strategy to deliver its full benefits, it must be backed by fiscal discipline, export diversification and protection from political interference,” he said, stressing that effective communication is just as critical as sound economic policy.
“When strong economics is matched with clear communication, credibility is built and sustained,” he added.