Dr Daniel Osabutey, a Senior Lecturer at the Accra Technical University, has backed the Bank of Ghana’s (BoG) recent decision to rebalance its international reserves, describing the move as a strategic risk-management measure rather than a sign of economic distress.

In an analytical piece addressing public debate over the decline in Ghana’s gold holdings from 37.1 tonnes in September to 18.6 tonnes by December 2025, Dr Osabutey said the shift was consistent with international central banking best practices.

He noted that at its peak, gold accounted for over 40 per cent of Ghana’s total international reserves, a level he described as “unusually high” compared to peer central banks, which typically maintain gold exposure within a 20–25 per cent range to preserve flexibility.

“While gold remains a valuable reserve asset, such a level of concentration exposes reserves to valuation volatility and limits immediate liquidity,” he said.

Dr Osabutey explained that although gold was widely regarded as a safe-haven asset, it was relatively illiquid during financial crises and generates no yield unless actively lent or swapped, noting that in contrast, foreign exchange reserves play a critical role in external debt servicing, financing essential imports, earning interest income, and stabilising markets during balance-of-payments pressures.

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“Converting a portion of gold holdings into foreign exchange improves liquidity, diversification, and return generation — the three core objectives of prudent reserve management,” he stated.

He cautioned that despite the economic rationale, changes in international reserves carry strong psychological and market signals, warning that poor communication could cause prudent policy decisions to be misinterpreted as fiscal weakness.

To maintain public confidence, he recommended that the Central Bank should publish a target range for gold holdings, outline the broad composition of its foreign exchange assets, and provide clear before-and-after illustrations of reserve allocation.

The analysis also acknowledged potential risks, including market speculation, exchange-rate pressures, and timing risks associated with selling gold ahead of possible price increases.

Dr Osabutey further noted reinvestment risks linked to foreign exchange assets, such as interest-rate volatility and sovereign counterparty exposure.

He concluded that the rebalancing exercise was “not a fire sale” but a calculated effort to strengthen economic resilience amid global uncertainty.

“For this policy to succeed, it must be supported by fiscal discipline, export diversification, and insulation from political pressures,” he said, adding that credible communication was as important as sound economics.

“When economics is right and communication is strong, credibility is earned and preserved,” he added.

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