DGPP losses were necessary sacrifice for stability, says Sagnarigu MP

The Member of Parliament for Sagnarigu has mounted a robust defence of Ghana's Domestic Gold Purchase Programme (DGPP), characterising the substantial financial losses flagged by the International Monetary Fund as unavoidable costs of the country's broader economic stabilisation agenda.

Attah Issah argued that evaluating the DGPP purely on its balance sheet losses misses the programme's wider macroeconomic contributions, which include rebuilding foreign exchange reserves, supporting cedi stability and driving down inflation from historically elevated levels.

The Cost of Stabilisation

Speaking on Citi FM, the lawmaker emphasised that government accepted from the outset that restoring economic health would require financial sacrifice. He highlighted the dramatic improvement in inflation as evidence of tangible benefit to Ghanaians' purchasing power, noting the reduction from peak levels of around 54% or 33.8% to approximately 5%.

The IMF recently assessed that DGPP expansion resulted in losses exceeding $1.7 billion in 2025, equivalent to roughly 1.5% of Ghana's gross domestic product. Whilst acknowledging that the programme became the Bank of Ghana's largest source of foreign exchange inflows, the Fund raised concerns about its impact on the central bank's already negative equity position.

Mr Issah countered that such assessments reduce a complex policy initiative to a simplistic narrative of losses, arguing instead that the programme aligned with the Bank of Ghana's dual mandates of ensuring price stability and promoting macroeconomic growth and development.

Why it matters for Ghana

The DGPP represents a critical test case in Ghana's ongoing economic stabilisation efforts. The programme's design—offering exchange rate incentives and premiums to encourage domestic gold sales through official channels—was intended to formalise artisanal and small-scale gold mining, reduce smuggling and boost foreign exchange inflows during a period of acute currency pressure.

For ordinary Ghanaians, the inflation reduction translates into improved real purchasing power, a concern that dominated household budgets during the 2022-2023 economic crisis. However, the central bank's weakening equity position raises medium-term questions about monetary policy independence and financial stability that extend beyond the current administration.

The debate over the DGPP also reflects broader tensions between short-term stabilisation costs and long-term institutional health—a dynamic that will likely resurface in discussions around Ghana's IMF programme and exit strategy.

Exchange Rate Incentives and Smuggling

Mr Issah defended the exchange rate premiums as deliberate policy choices designed to channel gold through official systems rather than informal smuggling networks. He contended that the losses, while substantial, represented an intentional trade-off to formalise Ghana's gold sector and strengthen institutional oversight.

The lawmaker rejected characterisations that the programme had deepened Ghana's debt burden, instead framing it as an internal policy cost absorbed to achieve macroeconomic objectives. Whether this argument will satisfy critics—including the IMF and fiscal watchdogs monitoring Ghana's debt sustainability—remains to be seen as the programme's results continue to unfold.