The Central Bank of Ghana (BoG) has announced its plans to withdraw progressively from the government’s Gold-for-Oil scheme.
This tactical decision, part of the International Monetary Fund (IMF) bailout program, aims to address the country’s decreasing foreign currency reserves and rising demand for dollars by oil importers, both of which have contributed to the cedi’s depreciation and rising living costs.
Recognizing the gravity of the situation, the BoG communicated its intention to lift the recently enacted surrender restriction on gold shipments 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.
The BoG revealed its plans to conduct a thorough examination and convey its findings to the renowned IMF Board in order to ensure a comprehensive grasp of the risks involved with the Gold-for-Oil program.
The Central Bank of Ghana further pledged to prioritize transparency in all aspects of the Gold-for-Oil programme.
According to BoG, this commitment includes guaranteeing clear visibility into contractual volumes and pricing structures for commodities’ export and import, as well as intermediaries’ margins.
In 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.”Bank of Ghana
BoG Clarifies Gold For Oil Programmes
According to the Central Bank, the 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.
BoG also disclosed that it 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, as stated by BoG represents a crucial step towards bolstering Ghana’s foreign exchange reserves, enhancing currency stability, attracting foreign direct investments, and fostering economic growth.
Notably, 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.