By Adnan Adams Mohammed
The Bank of Ghana is sharpening its focus on structural buffers, portfolio diversification, and financial risk instruments to shield the country’s external sector from persistent volatility in international commodity markets.
Speaking during the central bank’s Monetary Policy Committee press briefing, Governor Dr. Johnson Asiama laid out a comprehensive framework aimed at minimizing domestic economic vulnerability to global price fluctuations, particularly across key export commodities like gold, cocoa, and crude oil.
Responding to questions from Investor News Guide Managing Editor Adnan Adams Mohammed, Dr. Asiama underlined how external market forces, such as foreign monetary tightening, rapidly translate into domestic economic headwinds.
“Ghana, like many countries of its kind, is heavily exposed to commodity price movements, particularly developments in gold, cocoa and oil. These commodities have a significant impact on the economy, especially gold,” Dr. Asiama stated.
He further explained how concentration risks amplify these shocks: “Gold accounts for about 68% of Ghana’s exports, so movements in gold prices have significant implications for the country. For instance, when the United States increases its monetary policy rate, it can have a direct impact on us because gold prices may fall. Once gold prices decline, our external accounts feel the impact immediately.”
To counter these systemic risks, the central bank has executed strategic portfolio adjustments while supporting external market mechanisms to stabilize receipts.
“It is therefore true that our economy is exposed to commodity price movements, and we have to take steps to mitigate that vulnerability. Last year, in relation to gold, we undertook a diversification of our portfolio. You cannot hold everything in one area because that makes you highly exposed to movements in commodity prices,” the Governor noted.
“We are therefore promoting diversification. There is also a hedging programme ongoing on the side of the Gold Board, including the use of derivatives and greater use of the futures market rather than relying solely on spot prices. These are some of the measures we are using to reduce our vulnerability.”
Beyond central bank operations, Dr. Asiama stressed that long-term balance-of-payments stability relies heavily on national industrial policies that prioritize value addition over crude exports.
“Another important measure is greater domestic processing. I spoke about this at the last MPC meeting. The government is looking at processing more of the three major commodities, gold, cocoa and oil, within the country,” he said.
“When I see the Tema Oil Refinery returning to production, that is a positive development because it helps reduce our vulnerability. I am therefore pleased that the government is pushing ahead with that programme. There is also discussion about processing more of our cocoa. I would like to see more cocoa processed into chocolate and other finished products, which could then be sold across Africa. These are some of the ways we can reduce our vulnerability.”
Turning to the extractive sector, Dr. Asiama pointed to expanding in-country gold refining capacity as a pivotal milestone for strengthening national reserves and export valuation.
“On gold, you may have heard that there are now two gold refineries in Ghana. If we are able to process a higher proportion of our gold exports domestically, it will bring significant benefits to the economy,” Dr. Asiama added. “The President spoke about this last year, and we agree that it is a strategic move. It will help reduce our exposure to commodity price shocks. So, we are pursuing several measures to address the problem.”
Addressing central bank financial operations and planned administrative commitments, Dr. Asiama assured stakeholders of strict adherence to budgetary provisions: “These are budgeted expenditures. It is something we planned for since last year, and therefore, we made provisions for it in the budget.”
