The government has been advised to reconsider the 15-month reserves target since it is depriving the nation of domestic capital investments to stimulate economic growth.

According to US-based Assistant Professor of Economics at Niagara University, Dennis Nsafoah, a reserve objective closer to the International Monetary Fund’s estimated adequacy level of six months, perhaps with an additional prudential margin, would still provide Ghana with substantial protection against external shocks while freeing significant resources for productive domestic investment.

He disclosed this in a paper titled “Why Is Ghana Cutting Capital Expenditure to Pursue Reserves Far Above the IMF’s Adequacy Benchmark?”

The lesson from having too few reserves, he argued, should not be that Ghana must accumulate the largest reserve stock possible. “The correct lesson is that Ghana should maintain an adequate buffer while pursuing credible fiscal policy, exchange-rate flexibility and a productive economy capable of continuously generating foreign exchange”, he explained.

He also believed that there may be a political attraction to reserves because they provide a highly visible indicator of economic strength, stating that a government can announce that reserves have reached US$20 billion or 10 months of imports much more easily than it can quantify the long-run productivity gains from irrigation, electricity infrastructure or agricultural roads.

He added that what is easily measured is not necessarily what produces the highest economic return.

Dr. Nsafoah, who is also a member of the Research Committee of Tesah Capital, argued that Ghana does not need to choose between stability and development

However, he said that the Ghana Accelerated National Reserve Accumulation Policy (GANRAP) should not be abandoned. “Its underlying model—building reserves from domestically generated gold rather than borrowed foreign currency—is preferable to the Eurobond-funded reserve accumulation of the past”

However, he pointed out that the 15-month target should be reconsidered.