'Shoring up reserves' Ghana moves to buy gold in cedis not dollars from mining companies

The Bank of Ghana (BoG) under its ambitious gold purchase programme, will buy gold produced by mining companies in the local currency (cedi) and not in dollars.

Gold, per information gathered from the meeting, will be bought from mining companies at the prevailing world market prices but in cedis instead of dollars.

The decision to buy gold output of mining firms in cedis was reached during a meeting on Tuesday, August 9, between the Economic Management Team headed by Dr Bawumia, the Bank of Ghana, the Ministry of Lands and Natural Resources, the Minerals Commission, PMMC and the Ghana Chamber of Mines.

Further details indicate that the Central Bank will commence the purchase of gold in cedis starting next month, September 1, 2022.

The move, forms part of government’s roadmap for the implementation of the Central Bank’s Gold Purchase Programme across the industry.

The gold purchase programme, when effectively implemented, will represent a significant and sustainable addition to Ghana’s foreign exchange reserves over time and strengthen the country’s balance of payments.

The Bank of Ghana’s domestic gold purchasing programme was launched in June 2021 with the primary objective of increasing its gold reserves.

Subsequently, the Bank of Ghana initiated discussions with the Ghana Chamber of Mines (GCM) about its intention to purchase refined gold from mining companies in the country.

While mining companies in Ghana were prepared to support the programme, there was a need to ensure that the initiative met the governance, risk, compliance, and supply chain requirements of their various companies.

Under the programme, the central bank requires an estimated amount of ~10koz of gold annually from members of the Chamber of Mines over the next four to five years.