Professor of Finance and economist at the University of Ghana, Godfred Bokpin, has warned that Ghana’s gold-driven macroeconomic stability is fragile and could be reversed by a sharp decline in global gold prices.
Speaking on Joy FM’s Super Morning Show on Monday, August 24, while discussing the reported losses under the Domestic Gold Purchase Programme (DGPP), Prof Bokpin said Ghana had placed too much emphasis on the benefits of the global gold price boom while paying insufficient attention to the environmental destruction caused by irresponsible mining.
He warned that a 40 per cent decline in gold prices could wipe out the country’s reported economic gains within six to eight months.
“The stability we are talking about, the gains that we are talking about, are not durable,” he said.
Prof Bokpin argued that Ghana remained highly exposed to fluctuations in global commodity prices, noting that commodity prices historically undergo significant corrections after periods of strong growth.
He therefore called for rigorous sensitivity analysis and stress testing of Ghana’s gold-driven economic strategy to determine how the economy would fare in the event of a major fall in gold prices.
He also called for a comprehensive value-chain assessment of the gold sector that considers not only foreign exchange earnings and reserve accumulation but also the destruction of forests, water bodies and ecosystems.
According to Prof Bokpin, Ghana cannot claim to be better off if its economic gains come at the expense of the country’s long-term environmental survival.
“Any growth model that is heavily reliant on environmental destruction and primary commodities is never sustainable,” he said.
He said policymakers must look beyond short-term macroeconomic indicators and ensure that the environmental and social costs of gold production are properly accounted for when assessing the country’s economic performance.
