Dr. Ernest Addison, the Governor of the Bank of Ghana (BoG) has disclosed that the Central Bank has witnessed a substantial rise in its gold reserves since the inception of the Domestic Gold Purchase Programme (DGPP) in June 2021, two years down the line.

According to the Governor of the Bank of Ghana, as of June 30, 2023, the Bank has added over 7.70 tonnes of gold to its reserves, resulting in a remarkable surge from the previous total of 8.77 tonnes to an impressive 16.67 tonnes.

Explaining the reason for the surge, Dr Addison indicated that large mining firms contributed approximately 80% of the added gold volumes, while the remaining 20% was sourced from the Artisanal Small-Scale Mining (ASM) sector through an approved aggregator.

Dr Addison noted that the DGPP has not only enabled the Bank of Ghana to bolster its foreign reserves organically, but has also benefited the ASM sector by providing competitive prices for their gold. He added that the purchased gold ore is subsequently refined and stockpiled before being shipped to London Bullion Market Association (LBMA) certified refineries.

The Governor, meanwhile, expressed confidence in surpassing the initial targets set, stating that the Bank is well on track to more than double its gold reserves by the end of this year. This achievement, he said, aligns with the Bank’s commitment to diversifying reserve assets and improving risk-adjusted returns through a well-defined strategic asset allocation framework.

The DGPP’s responsible sourcing and due diligence framework, developed in collaboration with consultants and industry partners such as Positive Impact Sarl (Geneva), Aurum Global Partners, and Ghana Gold Expo Foundation, aims to promote responsible and sustainable mining practices within the domestic ASM sector.

Dr. Addison emphasized the potential long-term benefits of the program, including supporting the central bank’s price stability mandate by mopping up excess Ghana cedi liquidity through open market operations.

In addition to enhancing the Bank of Ghana’s resilience, the DGPP has the potential to catalyze investments in the gold mining sector. Local refineries are positioning themselves to take advantage of increased investment opportunities, ultimately leading to higher revenue from value-added gold exports.

Gold for Oil (G4O) Program

Dr. Addison highlighted the Gold for Oil (G4O) program, which supports the importation of petroleum products by purchasing gold from licensed small-scale miners and community mining schemes. He stated that the G4O program played a critical role during recent economic crises, ensuring cheaper fuel prices through direct engagement with oil producers. By leveraging the Bank of Ghana’s gold reserves, he noted that the G4O program has contributed to easing price pressures and stabilizing foreign exchange markets, ultimately supporting the Bank’s efforts to combat inflation.

The Governor iterated the Bank of Ghana’s commitment to formalize the ASM sector and address the challenges posed by illegal miners. “By providing tangible benefits to all stakeholders involved, the DGPP is expected to discourage illegal mining practices and encourage adherence to responsible mining standards. The Bank has implemented a rigorous due diligence process for aggregators, including criminal record checks and site visitations to ensure compliance with environmental regulations”.

Dr. Addison concluded by highlighting the Bank of Ghana’s strategic plans to expand the supplier base in the ASM sector, collaborate with the Precious Mineral Marketing Company (PMMC) to integrate responsible sourcing and due diligence frameworks, improve standards of community mines, and support the local refineries’ LBMA certification efforts.

The significant increase in gold reserves fortifies Ghana’s economy, ensuring better resilience and effective management of macroeconomic imbalances.