Government’s Gold Buying Strategy Threatens Agriculture Sector – S&P Warns

S&P Global Ratings has raised concerns over the Ghanaian government’s ongoing gold purchasing initiative, warning that the move could have unintended negative consequences on the country’s agriculture sector—particularly cocoa farming.

In a recent statement on Ghana’s economic outlook, the international ratings agency noted that while the formalisation of gold trade through the Ghana Gold Board (GoldBod) is boosting exports and taking advantage of high global gold prices, it may be diverting attention and labour away from agriculture.

“The government’s initiative to purchase gold from artisanal miners is formalising the trade and significantly boosting exports, particularly in the context of high gold prices. However, this has negative implications for the agricultural sector, especially cocoa farming,” S&P said.

The government established the Ghana Gold Board as the sole authority responsible for buying, selling, grading, and exporting gold and other precious minerals. The initiative has been widely praised for enhancing transparency and increasing foreign exchange earnings, but critics warn of growing labour shifts from farming to mining, especially in rural areas.

Fiscal and External Position Improving, But Concerns Remain

Beyond agriculture, S&P also assessed Ghana’s broader economic performance, suggesting that while fiscal slippage occurred in 2024, there are signs of a turnaround.

The agency said the fiscal deficit, on a cash basis, was broadly in line with the revised budget. However, on a commitment basis—which includes unpaid bills and arrears—it overshot projections by 3.7 percentage points of GDP due to accumulated debts to contractors and suppliers.

Despite these fiscal pressures, Ghana’s external position has improved markedly. The country recorded its largest-ever current account surplus in 2024, reaching $3.58 billion or 4.4% of GDP, fueled by a stronger trade balance and higher remittances. This in turn helped Ghana rebuild its foreign exchange reserves.

According to S&P, usable FX reserves (excluding encumbered assets) surged by $2.8 billion to nearly $4.6 billion over the year—bolstering investor confidence and enhancing the country’s ability to manage currency volatility. Still, the agency cautioned that structural vulnerabilities remain. The impact of the gold purchasing programme on long-term agricultural productivity, particularly in cocoa—a critical export commodity—will require close monitoring as the government balances short-term revenue gains with broader development goals.