The Bank of Ghana has launched a gold acquisition programme in its bid to shore up the foreign exchange reserves. The Governor of the bank, Dr. Ernest Addison launched the programme and said that they aim to double its gold holdings over the next five years.
The programme would allow the central bank to buy domestically produced gold from “selected” aggregators and mining firms and pay in the local currency at the prevailing market price.
“This marks a significant change in the modus operandi of Bank of Ghana’s foreign exchange reserves management operations. The programme would also enable the Bank to leverage its gold holdings to raise cheaper sources of financing to provide short term foreign exchange liquidity. We hope to double its gold holdings in the next five years from 8.7 tonnes to 17.4 tonnes,” said Dr. Addison.
Fair purchasing price
Dr. Addison added that the the Bank had engaged domestic mining firms in collaboration with the Ghana Chamber of Mines to buy refined gold from their refineries. So far, only one gold aggregator has been selected for the programme after an independent due diligence was conducted.
However, in the near-term, other gold aggregators will be eligible to participate in the programme once a roadmap is developed to ensure they meet the governance, risk, compliance and supply chain requirements. The Governor said the domestic purchasing programme had the potential to improve the small-scale gold mining sector by ensuring they receive a fair purchasing price for their gold, provide an incentive to formalise and move away from damaging environmental and social practices.
The Bank of Ghana ‘s foreign reserves has grown steadily over the last years to current levels of almost US $11.00 billion, but the portion of gold reserves has remained unchanged at 8.77 tonnes with the average value of gold reserves held as a percentage of Gross International Reserves (GIR) at 6.14%.