Ghana’s central bank gold reserve has increased from 8 tonnes to 14 tonnes in 18 months. This was disclosed by the President of Ghana, H.E. Nana Akuffo Addo and Governor of the Bank of Ghana, Dr. Ernest Addison in two separate events. The increase in the central bank gold reserve has been attributed to the domestic gold purchase program which was introduced in 2021. This program allows the Bank of Ghana (BoG) to purchase 20% of locally produced gold from large mining companies paid in the local currency at the market price. Through this program, the BoG is expected to augment the country’s foreign reserves.
Delivering the keynote address at the Natural Resources Stakeholders Dialogue that recently took place in Accra, the President of Ghana, H. E Nana Akuffo Addo reported that the increase in the gold reserve has been the highest the country has ever recorded since 1980. “For well over the century that we have been mining gold, our gold reserves between the 1980s and June 2021 were just 8 tonnes. Under the domestic gold purchase program, our gold reserves have increased from 8 to 14 tonnes as of the end of 2022. That is just 18 months of implementation of this program and clearly the reserves will continue to grow” he said.
On his part, the governor of BoG believes that Ghana’s gold holdings could have doubled if not for the country’s “gold for oil policy” which is running simultaneous to the current domestic gold purchase program. Basically, the ‘gold for oil’ policy ensures that the country purchases oil with gold instead of the dollar. “Remember we are not only buying gold for oil, we are also buying gold for our international reserves and this is an area where we have chalked a lot of success. I believe we have almost doubled holdings of gold within this short period that we started, from the 8 tonnes to almost 15 tonnes except that we also gave some of it up for the oil otherwise we would have doubled our gold holdings by now. It has been a very successful program” he stated in an engagement with the press in Accra.
Ghana has mined gold for centuries but most of the gold are exported with only a small amount of gold kept in its reserves. This quest of the government to increase the central bank’s gold reserve is therefore significant for the country as many central banks are stockpiling the commodity. Central banks more than ever have developed a huge interest in buying gold as most seek to move away from U.S Treasuries and the dollar, and also use the precious metal as a buffer to their currency in turbulent times. According to the World Gold Council, central banks purchased 1,136 tonnes of gold in 2022, the highest since 1950.
Since the financial crisis of 2008/2009, managing gold reserves have become significant to economic stabilization. A country’s gold reserve is indirectly a physical stockpile of cash. For instance, countries may choose to convert their gold reserves into cash to augment their expenditure when necessary.
Data from the World Gold Council indicates that major industrialized countries hold the largest volume of gold reserves followed by major emerging economies with most developing countries lagging behind. Nevertheless, central banks of emerging economies in 2022 were adjudged the main buyers of gold in 2022. Currently, the global demand by central banks for gold ranks first surpassing jewellery, technology and other investment sectors.