BoG touts economic recovery strategies; vows vigilant oversight amid economic recovery
In a keynote address at the Chartered Institute of Bankers 2023 Governor’s Day, Dr. Ernest Addison, the Governor of the Bank of Ghana, outlined pivotal strategies implemented by the Central Bank shaping the nation’s economic trajectory. Against a backdrop of recent macroeconomic indicators signaling a noteworthy turnaround, the Governor underscored the bank’s commitment to sustained policy efforts.
A standout initiative in this endeavor is the Domestic Gold Purchase Programme (DGPP), launched in June 2021. Through astute utilization of the DGPP, the Bank has seamlessly converted domestic assets into foreign assets by acquiring locally produced gold in local currency.
The Gold for Reserves (G4R) transactions, a key facet of DGPP, exceeded expectations, with the bank purchasing 17.89 tons of gold, equivalent to a staggering US$1.14 billion. This move not only doubled the central bank’s gold reserves but also outpaced the initial ambitious target.
Additionally, the Gold for Oil (G4O) programme, a strategic component of DGPP, has played a pivotal role in reducing the demand for US dollars by Bulk Oil Distribution Companies (BDCs). By facilitating barter payments for the importation of petroleum products, a total of 14.23 tons (US$907 million) of gold has been leveraged, thereby curbing foreign exchange pressures.
The impact of these initiatives reverberates beyond reserve augmentation. G4O has positively influenced the Bank’s cash flow, stabilized ex-pump prices, bolstered market confidence, and shored up the local currency.
Against the backdrop of these economic maneuvers, Dr. Addison emphasized the broader enhancements in the regulatory and supervisory frameworks. Collaborative efforts with entities such as the Ghana Deposit Protection Corporation and the Financial Stability Council are underway, aimed at fortifying the financial system’s overall resilience.
Assuring the Ghanaian public of a gradual economic rebound, Dr. Addison pointed to improving growth, declining inflation, and positive fiscal and external positions. The prudent policies implemented thus far are poised to fortify the recovery process and reinforce disinflationary dynamics, contingent upon the absence of unforeseen shocks.
In a commitment to vigilant oversight, Dr. Addison pledged to closely monitor developments in the banking sector. With an unwavering focus on depositors’ safety and the stability of the financial system, the Bank of Ghana affirms its readiness to take decisive actions as necessary.
