Associate Professor of Finance at Andrews University in the US, Prof William Kwasi Peprah, has warned that Ghana’s push to deepen its gold reserves could come at a steep social cost.

Speaking on Joy News’ PM Express on Monday, he said the debate must move beyond theory and focus on what the country may be sacrificing in the process.

“I listen carefully to the finance minister. He was trying to make the point that the economic management team using that model was not helpful.”

He said the alternative being proposed is not entirely misplaced, but for him, the real issue is the trade-off.

“The fact is that the opportunity cost of you using your money to focus on development, but tying it down in reserves of gold…”

“We all know gold will price to appreciate, even though it has high volatility, but it’s on an increasing trend.”

Still, he pressed a harder question.

“But let’s ask ourselves, how much are we prepared to sacrifice in terms of development, using current funds for current development to save for the future?”

“We should probably have a balance,” Prof Peprah said, questioning the scale of the target being pursued.

“If the general worldwide developed economies are doing 10 months, the question is, why are we targeting 15 months?”

“In principle, I’m not against this policy,” he stated, stressing that his concern is with the stretch target.

“But the 15 months is where I see that we could probably be better off using the five months of whatever funds you will get to support our current development.”

Prof Peprah said the country’s needs are pressing and visible. “So many, so many, many, many, many areas need development.”

“And there’s a lot of research that points to this fact that when you focus on building reserves, it has a social cost of about 1% of your GDP.”

For Ghana, he argued, that figure is not trivial. “And looking at Ghana, that 1% amount opportunity cost is very significant.”

He brought the impact closer to home. “It could be able to build a hospital or school in my hometown and other places.”