Flagbearer of the New Patriotic Party (NPP) Vice President Dr Mahamudu Bawumia has touted the success of the Gold for Oil programme.
He says the programme saved the economy from collapse.
“Without the gold purchase programme and the gold for oil programme, this economy would have collapsed,” he said during a media encounter on Sunday, August 25.
Earlier, the Governor of the Bank of Ghana (BoG), Dr Ernest Addison, recommended that the Gold for Oil programme should continue. He explained this was an innovative porgramme that was introduced to deal with a crisis.
Dr Addison however revealed that the central bank is seeking to make a commercial bank take over the programme to allow for the BoG to focus on its core mandate.
Asked by Buem lawmaker Kofi Adams whether this programme is an initiative he will recommend to be pursued considering his earlier position that the programme will be gradually phased out, he answered while speaking before the Public Accounts Committee of Parliament on Monday, April 8, he said “It is a programme that we recommend to continue because it helped us in the period of crisis. We only want to make sure that this is done by a commercial bank so that we can have time to focus on our operations as a central bank.
“So this is the discussion that we are holding going forward but the ability to be able to exchange our natural resource directly for oil when oil prices get out of hand, we think that it is a very innovative porgramme.
“So it is really about the central bank spreading itself too thin by trying to add gold for oil also into our business but we are fully focused on buying gold to build our reserves.”
Regarding the Gold For Reserves programme, he further assured the PAC that by next year the central bank will see a huge jump in its holdings of gold due to this particular programme.
Dr Addison said that the full benefits of the programme had not been seen yet because it was started in 2022.
In July 2021, the BoG commenced a Gold Repurchase Programme to double its gold holdings in five years.
During the launch of the programme Governor Addison stated that the Bank of Ghana‘s foreign reserves had grown steadily over the last fifteen years to current levels of almost US$11.00 billion, but the portion of gold reserves has remained unchanged at 8.77 tonnes, with the average value of gold reserves held as a percentage of Gross International Reserves (GIR) at 6.14 percent.
He added that a cross country comparison showed that contrary to Ghana’s static gold holdings in its reserves, the USA and other industrialized countries in the Eurozone had continued to hold large gold reserves, post the gold standard era.
“According to the International Monetary Fund (IMF) and the World Gold Council, major industrialized countries held the largest volume of gold reserves as at April 2021, followed by major emerging markets with major developing countries lagging behind the curve.
“Globally, Central Banks demand for Gold, over the past decade, ranks third behind Jewellery, Technology and Investment sectors. These trends are revealing because Ghana has mined gold for over three centuries and for the most part, the gold is exported. In 2019 for instance, Ghana was adjudged the largest producer of gold in Africa and
the 7th largest in the world. Yet, in that same year, other central banks acquired a record level of 670 tonnes of gold to boost their reserves according to the World Gold Council.
“The statistics show that the pandemic period saw a marginal decline in central banks’ gold demand but, the number of central bank buyers outweighed the number of sellers over the period. Most of the buyers were from emerging market countries which had lower ratios of goldto-total reserves. For instance, Turkey was the largest annual gold net purchaser, adding 134.5 tonnes to its official gold reserves in 2020 alone. Other large net purchasers of gold during the pandemic year were, India, Russia, United Arab Emirate, Qatar, Colombia and Cambodia, among others. Ghana added nothing to its gold reserves over the period,” he said.
