a. The ASM G4R programme was introduced by the Bank of Ghana as an intervention to accumulate and diversify its external reserve buffers to help achieve its primary mandate of price stability while boosting confidence in the economy.
b. Ghana has traditionally accumulated foreign reserves through inflows from the export of commodities such as cocoa, oil, and gold, among others. These inflows have been inadequate for meeting sovereign external financing obligations.
Thus, resulting in significant FX market volatility and its attendant macroeconomic instability.
c. Consequently, governments resorted to borrowing to shore up reserves to meet the country’s FX needs. These borrowings create debt with associated cost in the form of interest payments and transaction advisory fees. Also, these inflows only provided palliative relief as the debts have to be repaid.
d. Between 2017-2021, the NPP government borrowed on average, over $2 billion dollars a year, from the Eurobond market to shore up reserves.
This borrowing spree eventually plunged Ghana into debt distress and sovereign debt default by 2022, causing the nation to lose access to the capital market. This crisis was marked by hyperinflation of 54%, currency aepreciation of over 50% by November 2022, credit rating downgrades and untold hardships.
e. The ASM G4R programme was therefore introduced by the BoG to help the country accumulate foreign exchange reserves, through cedi-based gold purchases, without creating new debt. The ultimate goal of the programme is forex accumulation for national economic stability and not profit for the central bank.
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