Local Gold Refinery to Strengthen BoG’s Domestic Gold Purchase Programme; Reduce Reliance on External Borrowing
Governor of the Bank of Ghana, Dr Ernest Addison, has said the operationalization of Royal Gold Ghana refinery will help diversify and organically grow the Central Bank’s foreign exchange reserves, as well as aid the central bank in accumulating more refined gold reserves to reduce dependence on external borrowing.
Additionally, the presence of a local gold refinery will enable the production of gold coins and other artifacts which can act as a safe-haven asset and will broaden investment options in the country’s financial markets and contribute to financial stability.
Making the assertion during the grand opening of Royal Gold Ghana Limited on Thursday, August 8, 2024, the Governor quipped the gold refinery will provide further impetus to the BoG’s successful Domestic Gold Purchase Programme (DGPP).
According to the Governor, the BoG under the DGPP has been able to accumulate sizable foreign exchange buffers, for the most part, significantly exceeding expectations under the IMF programme.
Since the inception of the Domestic gold purchase programme, the Bank of Ghana has bought 65.4 tons of gold, valued at $5.07 billion. This year, since January, the Bank has bought 23 tons of gold valued at about $1.8 billion.
“The programme, along with other donor disbursements, puts the Bank in a favourable position to support the country’s external payments obligations as and when they fall due,” averred the Governor.
The benefits of establishing a local gold refinery broadly align with the Bank of Ghana’s objective to build adequate foreign reserves to stabilize the economy during adverse domestic and external shocks and help achieve its core mandate of price stability.
Speaking further at the event, Dr Addison noted that the refinery will also play an important role in reducing gold smuggling, which has been a major challenge for the country over the years.
By providing a ready market for artisanal and small-scale miners, the gold refinery can mitigate the incentive for smuggling and help promote transparency and accountability in gold trading.
The opening of Royal Gold refinery opens a new era to promote gold beneficiation and value addition which will contribute to economic growth, poverty reduction, and ultimately improvement in the livelihoods of Ghanaians.
Gold is currently the nation’s leading export commodity with projected export earnings for 2024 estimated at close to $10 billion. Its value chain presents immense opportunities for job creation, increased foreign exchange earnings, and economic development.
Even though Ghana has exported minerals, in particular Gold for over a century, its full potential on the local economy has yet to be fully realized. The exportation of raw materials without value addition results in potential loss of revenue and jobs.
