Bawumia lauds BoG gold purchase programme

The Vice-President, Dr Mahamudu Bawumia, has lauded the decision by the Bank of Ghana (BoG) to implement a gold purchase programme designed to purchase locally-produced gold and keep as reserve.

He said the decision was a master stroke in the quest for stronger macroeconomic management and in providing a bulwark for the Ghana cedi.

Delivering the keynote address at the 2021 Gold Expo Week in the Western Regional capital,Takoradi last Thursday, the Vice-President intimated that the launch and implementation of the domestic gold purchase programme by the BoG and the Community Mining Programme (CMP) were going to be catalyst for the formalisation of our artisanal small-scale mining sector.

“The Domestic Purchase Programme by the central bank and other programmes by the Precious Minerals Marketing Company (PMMC) and the Ghana Revenue Authority will in the coming years set everybody’s mind at ease regarding the volume and value of gold legitimately exported and reserved,” he said.

Ghana Mining Week

The Gold Expo 2021 is part of activities to commemorate Ghana Mining Week, which is held in the first week of July each year, with the aim of shaping the discourse and policy on mining as well as provide networking and business opportunities in the industry.

On the theme: ‘The Future of Ghana’s Gold,” the three-day event will include a Mining Policy Forum, Diplomatic mining field trip and will be climaxed with Ghana receiving an award for being a responsible gold mining hub at the Cannes Film Festival 2021.

The three-day event is being hosted by the Western Regional Coordinating Council with technical support from the Ministry of Lands and Natural Resources.

Benefit of gold reserve

Dr Bawumia explained that the benefits of having a healthy amount of physical gold in a country’s reserves were varied and enormous, including shoring up the value of the local currency.

“Ghana is Africa’s largest gold producer, having overtaken South Africa in 2019. But Ghana’s extracted gold assets are based on the royalty take, limited dividends and corporate income tax.

“These fiscal gains are typically taken in cash, and about 80 per cent paid into the Consolidated Fund. The Bank of Ghana holds moderate amount of physical gold of 8.7 tonnes as part of its reserves. For nearly three decades, almost 60 years, we have not added an ounce to our reserve holdings.

“But gold has now become the cornerstone of central banks’ modern reserve management. Central banks have become the third force behind jewellery and technology and investment sectors in the global gold demand in the past decade.

Recounting his suggestion to the BoG, a year ago, to consider exploring the possibility of purchasing locally-produced gold as a way of boosting the economy and shoring up the value of the cedi, Dr Bawumia expressed delight that the bank had taken up the challenge and implemented it.

“The Bank of Ghana spent a whole year carefully studying the entire gold production value chain and putting in place the necessary internationally acceptable procedures and has, since June 2021, begun a Gold Purchase Programme that will strengthen the future macroeconomic management and shore up the cedi over time with real gold backing.

“The benefits are enormous and we can only hope and encourage the Bank to continue with this initiative,” Dr Bawumia emphasised.

Sustainable development

The Vice-President said since the world recognised Ghana as a leader in gold production, that further added to the already existing responsibility of ensuring inclusive and sustaining development in the sector, most especially the deprived communities where gold was produced.

He said it was a long-held position of President Nana Addo-Dankwa Akufo-Addo to ensure inclusive growth and sustainable development in the mining sector for the benefit of Ghanaians.

However, the challenge, over the years, with Ghana's mining sector had not only been how to undertake mining in a sustainable and responsible manner, but also ensuring that all stakeholders received what was due them.

He further said the setting up of local refineries, such as those by the PMMC and Gold Coast Refinery, would further broaden the market for sustainably mined gold, fill in a missing part of Ghana’s extractive sector while seeing to the growth of local refining.

Data

According to the World Gold Council, central banks acquired a record level of about 670 tonnes to boost their reserves as the precious metal has now become the cornerstone of central banks’ reserve management.

In 2020, in the midst of the COVID-19 pandemic, Turkey was the largest annual gold buyer, adding 134.5 tonnes to its official gold reserves, followed by India (93.8 tonnes), United Arab Emirates (22 tonnes) and Qatar (9.18 tonnes).