Governor of the Bank of Ghana, Dr Ernest Addison has said the implementation of the Domestic Gold Purchase programme had significantly improved the country’s local currency since its inception.
According to him, the programme which started in 2021 was intended to focus on increasing the country’s gold reserves by buying more gold as the country was producing a chunk of the commodity, hence the decision to undertake the programme.
Dr Ernest Addison who was speaking in an interview with Central Banking on the sidelines of the ECCB 40th anniversary and Central Banking Autumn meetings in 2023 explained the concept behind Domestic Gold Purchase programme.
“We had never focused on the gold part of reserves, always holding the same 8.7 tonnes or so for the last 40 to 50 years. We realised we were producing a lot of gold. There is a lot of activity out there. So, the question then came up as to why not buy more gold to increase our reserves,” he told Christopher Jeffery of centralbanking.com.
“It was one of those moments when an obvious policy that could have been implemented several years ago appears to make a lot of sense, especially during the post-Covid period when we were looking at several ways to manage the crisis. We started it in 2021,” Dr Addison added.
Touching on whether the Domestic Gold Purchase programme was yielding the intended results for which it was launched, Dr Addison stated “Yes, it has a material impact in helping to stabilise the currency, especially this year”
“…That’s because the gold reserves programme has raised over $1 billion, compared with the IMF’s $600 million disbursement since the start of 2023 – with another $600 million due in November/December. So, it is a significant amount,” the BoG Governor further explained.
In June 2021, the Bank of Ghana launched the Gold Purchase Programme to augment the country’s foreign reserves.
The programme was aimed at boosting the Central Banks’ ability to buy domestically produced gold from selected gold aggregators and mining firms, and pay them in local currency at the prevailing market price.
Through this programme, the BoG expects to double its gold holdings in the next five years while increasing the country’s foreign exchange reserves portfolio.
MA/NOQ
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Dr. Ernest Addison, Bank of Ghana Governor