BoG to exit gold for oil policy as part of IMF prescriptions

BoG to exit gold for oil policy as part of IMF prescriptions

BoG to exit gradually from government’s Gold-for-Oil programme as the economy stabilizes as part of the International Monetary Fund (IMF) bailout programme.

BoG to exit 20% gold surrender demand

The Bank of Ghana (BoG) will also gradually reverse the recently imposed surrender requirement on gold exports to BoG.

The move tackles dwindling foreign currency reserves coupled with demand for dollars by oil importers, which was weakening the cedi and increasing living costs.

Report of thorough analysis to be submitted to IMF Board

Before exiting Gold-for-Oil programme, BoG will conduct a thorough analysis of the risks that the central bank is facing under the programme and report the findings to the IMF Board.

BoG to exit

These are contained in the full document spelling out the details of the three-year $3 billion bailout programme with Ghana.

Transparency in contractual volumes and pricing structure

BoG has promised to ensure that contractual volumes and pricing structure for commodities’ export/import and intermediaries’ margins are transparent.

The Central Bank also assured that the scheme will be implemented in line with the applicable legal framework, and fiscal risks discussed with the Ministry of Finance.

Auditor General to conduct regular performance audits

The Auditor General is to conduct regular performance audits of the scheme, while BoG gold purchases follow best international practice and central bank safeguards standards in line with IMF guidelines.

20% gold surrender directive

Last year, government ordered all large-scale mining companies to sell 20% of their entire stock of refined gold at their refineries to the Bank of Ghana from Jan. 1, 2023.

Gold produces agree to sell 125,000 ounces to BoG

This directive is different from an agreement reached by gold producing member companies of the Ghana Chamber of Mines to sell 125,000 ounces to BoG.

First right of refusal granted BoG

In July 2022, Vice-President, Dr Mahamudu Bawumia announced that BoG was given the right to purchase any amount of gold mined in Ghana.

He noted that the first right of refusal given the BoG to purchase gold mined in the country is backed by law to deepen the gold purchase programme the BoG started to build up the country’s reserves.

Government therefore directed all large-scale mining companies to sell 20% of their entire stock of refined gold at their refineries to BoG from Jan. 1, 2023

After the central bank had purchased the gold at world market prices, the mining companies could export the remainder.

BoG gold holdings increase from 8.7 to almost 15 tonnes

Governor of BoG, Dr. Ernest Addison this week disclosed that holdings of gold increased from 8.7 tonnes to almost 15 tonnes since the gold purchase programme started.

Gold producing member companies of the Ghana Chamber of Mines agreed to sell about 125,000 ounces of gold to BoG under the central bank’s Domestic Gold Purchase Programme.

Newmont sells 26,000 ounces to BoG

Newmont becomes the first gold mining company in Ghana under the Domestic Gold Purchasing Programme to sell gold to the Bank of Ghana following the procurement of 26,000 ounces of gold between May and November 2022.

Gold Fields sells 26,000 ounces to BoG

Gold Fields Ghana has also sold 26,000 ounces of gold to BoG in December 2022, following a gold purchasing agreement with the central bank.

BoG is optimistic that the domestic gold purchase programme will pave the way to grow foreign exchange reserves to foster confidence, enhances currency stability, creates a more attractive environment for foreign direct investments and economic growth.

This programme will also enable the Bank leverage its gold holdings to raise cheaper sources of financing to provide short term foreign exchange liquidity.

The Economic Management Team, the Central bank, Ministry of Lands and Natural Resources, Minerals Commission and PMMC met with the Ghana Chamber of Mines to draw a roadmap for the implementation of the Bank of Ghana’s Gold Purchase Programme.

Discussions on the Gold Purchase Programme started in 2020 between the BoG and gold producing member companies of the Chamber to support the Ghana’s foreign exchange reserves.