Bank of Ghana Increases Gold Reserves to Bolster Economic Resilience
The Bank of Ghana (BoG) has announced the addition of 7.70 tonnes of gold to the country’s reserves, according to Governor Dr. Ernest Addison. This move is part of the central bank’s Domestic Gold Purchase Programme (DGPP) aimed at increasing gold holdings to provide additional buffers for the economy against future shocks.
During his address at the 2023 Gold Expo in Takoradi, Dr. Addison highlighted the impact and benefits of the DGPP. The program, launched in June 2021, set the objective of doubling the central bank’s gold reserves, which stood at 8.77 tonnes at the time, within a five-year timeframe.
Based on the current spot price of gold at $63,000 per kg, estimates suggest that the 7.70 tonnes of gold added to the reserves could be valued at over $485 million. This brings the total gold in Ghana’s reserves to 16.47 tonnes.
Dr. Addison stated, “I am happy to announce that since the inception of the DGPP program in June 2021, the central bank has added more than 7.70 tonnes of monetary gold to the gold reserves as of June 30, 2023.”
Regarding the sources of the gold, the Governor explained that mining firms contributed approximately 80%, while the remaining 20% came from the artisanal and small-scale mining (ASM) sector through an approved aggregator.
The Gold Expo, held under the patronage of the Ministry of Lands and Natural Resources, provided a platform for stakeholders in the mining sub-sector to engage in conversations, attract investor interest, and promote responsible and safe mining practices.
Dr. Addison expressed confidence in exceeding the target of doubling the central bank’s gold reserves by the end of the year, stating that they were well ahead of schedule. He emphasized that the DGPP provided a means to organically grow foreign reserves through the refining of purchased gold, without disrupting incentives for local gold producers. Additionally, he noted that the program had the potential to support price stability by mopping up excess Ghana cedi liquidity through open market operations.
The DGPP also contributes to the ASM sector by providing competitive prices for gold purchased from them, further supporting responsible and sustainable mining practices.
The increased gold reserves will diversify the country’s reserve assets and improve risk-adjusted returns for the portfolio. Furthermore, the central bank plans to leverage its gold holdings to secure funds at competitive terms for foreign exchange liquidity management and catalyze investments in the gold mining sector.
Local refineries in Ghana are positioning themselves to take advantage of increasing investments in the sector, aiming to enhance revenue through higher value-addition in gold exports.
Governor Addison also highlighted the Gold for Oil (G4O) initiative, which utilizes the existing DGPP structure. Through this program, gold is purchased from licensed small-scale miners and Community Mining Schemes to support the importation of petroleum products. The G4O initiative played a crucial role during the recent economic crisis by facilitating cheaper fuel imports and easing price pressures.
Overall, the Bank of Ghana’s efforts to increase gold reserves aim to enhance economic resilience, diversify assets, attract investments, and support the country’s development objectives.