"Bank of Ghana initiates exit from Gold-for-Oil programme to stabilize economy"

" Bank of Ghana initiates exit from Gold-for-Oil programme to stabilize economy \r\n\r\nIn a significant move to stabilize Ghana's economy, the Bank of Ghana (BoG) has unveiled plans to gradually withdraw from the government's Gold-for-Oil programme. This strategic decision, forming part of the International Monetary Fund (IMF) bailout programme, aims to address the country's dwindling foreign currency reserves and the surging demand for dollars by oil importers, factors that have contributed to the depreciation of the cedi and rising living costs.\r\n\r\nThe BoG, acknowledging the urgency of the situation, will also reverse the recently imposed surrender requirement on gold exports to the central bank. The surrender requirement was introduced as a temporary measure to tackle the challenging economic landscape and ensure adequate foreign exchange reserves. However, with the economy showing signs of stabilization, the BoG is confident in its ability to gradually roll back this directive.\r\n\r\nTo ensure a comprehensive understanding of the risks associated with the Gold-for-Oil programme, the BoG plans to conduct a thorough analysis and present its findings to the esteemed IMF Board. This meticulous approach underscores the central bank's commitment to responsible governance and proactive risk management.\r\n\r\nFurthermore, the Bank of Ghana pledges to prioritize transparency in all aspects of the Gold-for-Oil programme. This commitment includes guaranteeing clear visibility into contractual volumes and pricing structures for commodities' export and import, as well as intermediaries' margins. By adhering to applicable legal frameworks and engaging in constructive dialogues with the Ministry of Finance to address fiscal risks, the BoG aims to foster a robust and accountable system.\r\n\r\nIn its pursuit of accountability, the BoG has designated the Auditor General to conduct regular performance audits of the Gold-for-Oil programme. This measure will provide independent oversight and ensure compliance with the highest standards of financial integrity. Moreover, the BoG's gold purchases will adhere to international best practices and central bank safeguards standards in alignment with the guidelines set forth by the IMF.\r\n\r\nThe gold surrender directive, which required large-scale mining companies to sell 20% of their refined gold stock to the BoG starting from January 1, 2023, should not be confused with the agreement reached between the gold-producing member companies of the Ghana Chamber of Mines and the BoG. Under this agreement, gold producers committed to selling 125,000 ounces of gold to the central bank.\r\n\r\nThe BoG's gold holdings have witnessed a significant increase since the initiation of the Domestic Gold Purchase Programme, rising from 8.7 tonnes to almost 15 tonnes. This expansion of gold reserves represents a crucial step towards bolstering Ghana's foreign exchange reserves, enhancing currency stability, attracting foreign direct investments, and fostering economic growth.\r\n\r\nNotably, Newmont, one of Ghana's leading gold mining companies, became the first participant in the Domestic Gold Purchasing Programme to sell gold to the Bank of Ghana. Between May and November 2022, Newmont successfully procured 26,000 ounces of gold, marking a pivotal milestone in the programme's implementation. Following suit, Gold Fields Ghana also entered into a gold purchasing agreement with the BoG, selling 26,000 ounces of gold in December 2022.\r\n\r\nThe Bank of Ghana remains optimistic that the Domestic Gold Purchase Programme will serve as a catalyst for increasing foreign exchange reserves, instilling confidence in the local currency, and creating an attractive environment for foreign direct investments. Additionally, the programme will allow the BoG to leverage its gold holdings to access more affordable sources of financing, thereby ensuring short-term foreign exchange liquidity.\r\n\r\nRecognizing the significance of collaboration, the Economic Management Team, the Central Bank, the Ministry of Lands and Natural Resources, the Minerals Commission, and the Precious Minerals Marketing Company (PMMC) convened to outline a roadmap for the effective implementation of the Bank of Ghana's Gold Purchase Programme. The collective efforts of these entities, coupled with the proactive engagement of gold-producing member companies of the Ghana Chamber of Mines, demonstrate the commitment to fortifying Ghana's foreign exchange reserves and driving sustainable economic development.\r\n\r\nThe discussions on the Gold Purchase Programme, initiated in 2020 between the Bank of Ghana and the gold-producing member companies of the Ghana Chamber of Mines, have proven instrumental in shaping the country's approach to support its foreign exchange reserves. Through measured and strategic actions, Ghana seeks to capitalize on its substantial gold resources to underpin economic stability, attract investments, and secure a prosperous future.\r\n\r\nAs Ghana progresses along the path of economic recovery, the Bank of Ghana's gradual exit from the Gold-for-Oil programme symbolizes a well-calibrated response to prevailing challenges. By fostering transparency, bolstering gold holdings, and aligning with international best practices, the central bank aims to steer Ghana's economy towards sustained growth and prosperity."

"Bank of Ghana initiates exit from Gold-for-Oil programme to stabilize economy"

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