The country’s currency, the cedi, may not stabilize despite the establishment of the Royal Gold Refinery in Ghana, economist Prof. John Gatsi has said.
According to the economist, though refining gold in Ghana is a positive step for the economy, it is not a panacea for the cedi’s stability.
His comments come after Vice President and presidential candidate of the New Patriotic Party, Dr. Alhaji Mahamudu Bawumia, said he would stabilize the cedi with the country’s gold if elected into power on December 7.
At a meeting with Organized Labor, Dr. Bawumia said “my goal is that we are going to back our currency with gold and that is where I want us to go, increasingly backing our currency with gold. Because it is very easy for us to do so if you keep having the gold reserves.”
Prof. Gatsi emphasized that currency stability depends on a number of factors, including accountability, transparency, productivity, and inclusive growth.
He pointed out that the strength of the dollar is not solely due to America’s large gold reserves, but rather its robust economic structure.
The gold refinery is one of several real sector interventions by the Bank of Ghana to support the economy.
However, Prof. Gatsi cautioned that building gold reserves and refining gold alone will not ensure currency stability, and urged policymakers to address the underlying factors contributing to the cedi’s volatility.