Vice President Dr. Mahamudu Bawumia has asserted that the Cedi can be most effectively bolstered by gold.
In this regard, he has suggested a framework designed to direct all major gold demands through the Bank of Ghana’s gold acquisition program.
During his address at the inauguration of the Royal Ghana Gold Refinery in Accra on Thursday, August 8, Dr. Bawumia emphasized this initiative.
I would like to propose a new foreign exchange regime management architecture for Ghana next year in which the value of the cedi with everything we have put in will be anchored to gold. I want us to move our foreign exchange management because we need an anchor and I believe that the best anchor for the Cedi is gold. I want us to anchor the Cedi to gold.
I am proposing a framework which we will discuss with the central bank, of course, and we will see where. But the framework that I am proposing is very simple. Having looked at all that we have done, all significant demand for gold should be channelled through the Bank of Ghana’s gold purchase programme. If you have GHȼ3 billion and you are looking to buy forex, the Bank of Ghana can take the GHȼ3 billion and buy gold and give you your forex. Demand equals supply, exchange rate doesn’t move.
It is just a simple use of our gold reserves to meet the demands of forex. Once you can anchor the Cedi with gold so that you are able to meet demand then there are so many extra forex reserves to do other things for the country. But then you will maintain long-term exchange rate stability, which will be anchored on gold and then we will move forward.
Governor Dr. Ernest Addison expressed that the creation of Royal Gold Ghana Limited (RGGL), a domestic gold refinery in Ghana, will undoubtedly enhance the effectiveness of the Bank of Ghana’s (BoG) Domestic Gold Purchase Programme (DGPP).
He noted that through the DGPP, the Bank of Ghana has successfully built substantial foreign exchange reserves, largely surpassing the targets set by the IMF program.
Since the launch of the Domestic Gold Purchase Programme, the Bank of Ghana has acquired 65.4 tons of gold, amounting to a value of US$5.07 billion.
This year, since January, the Bank has bought 23 tons of gold valued at about US$1.8 billion. The programme, along with other donor disbursements, puts the Bank in a favourable position to support the country’s external payments obligations as and when they fall due.
