The Bank of Ghana has launched a domestic gold purchase programme to help shore up the country’s foreign reserves.The move will enable the Bank of Ghana (BoG) to buy gold from selected local aggregators and mining firms and pay in the local currency at the prevailing market price.
The Bank hopes to double its gold holdings in the next five years from 8.7 tonnes to 17.4 tonnes, the Governor said.
Dr. Ernest Addison, who launched the programme, said it would allow the BoG to grow its foreign exchange reserves to foster confidence, enhances currency stability, creates a more attractive environment for foreign direct investments and economic growth.
He said 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.
He said 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.
It would also lead to a route to formalise and improve ability to sell into formal gold markets and thereby reduce their vulnerability to illegal actors in the domestic
and international gold supply chains.
The Governor of the Bank of Ghana, last year announced that a decision has been taken to increase the country’s reserves.
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 percent.