Dr Ernest Addison, Governor of the Bank of Ghana (BoG), has recommended that the Gold for Oil scheme continue.

He added that this was an innovative programme that was implemented to cope with a situation.

Dr Addison did add, however, that the central bank is looking to have a commercial bank take over the scheme so that the BoG can focus on its main duty.

When Buem lawmaker Kofi Adams was asked if this is an initiative he will recommend being pursued, given his previous position that the programme would be gradually phased out, he responded while speaking before the Public Accounts Committee of Parliament on Monday, April 8, “It is a programme that we recommend continuing because it helped us during the crisis. We just want to ensure that this is handled by a commercial bank so that we may concentrate on our duties as a central bank.

“So this is the conversation that we will have going ahead, but we believe that the capacity to trade our natural resources directly for oil when oil prices rise is a highly unique programme.

“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 scheme, he told the PAC that by next year, the central bank’s gold holdings will have increased significantly as a result of this plan.

Dr Addison stated that the full effects of the programme have yet to be demonstrated because it began in 2022.

The BoG launched a Gold Repurchase Programme in July 2021 with the goal of doubling its gold holdings over the next five years.

During the program’s launch, Governor Addison stated that the Bank of Ghana’s foreign reserves had steadily increased over the last fifteen years to nearly US$11.00 billion, but the portion of gold reserves had 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 stated that a cross-country analysis revealed that, unlike Ghana’s static gold holdings in its reserves, the United States and other industrialised Eurozone nations maintained considerable gold reserves after the gold standard period.

“According to the International Monetary Fund (IMF) and the World Gold Council, big industrialised nations had the highest volume of gold reserves as of April 2021, followed by major emerging markets, with major underdeveloped countries trailing behind.

“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 gold to 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 Emirates, Qatar, Colombia and Cambodia, among others. Ghana added nothing to its gold reserves over the period,” he said.

When asked if the God for Reserves initiative has had any influence on the transfer of foreign reserves assets, Dr Addison answered, “The Gold for Reserves scheme began in 2022, therefore you will not see the full effect of the advantages until 2022.

“As you can see, our gold holdings increased by only $50 million. But I can guarantee you that next year when we come before you, you will see a significant increase in our gold holdings as a result of that specific project.”

The PAC was looking over the Auditor General’s Report for 2023.

According to the report, the Bank of Ghana’s foreign exchange reserve assets as of 30 June 2022 were US$7,634.08 million, down from US$11,023.97 million on the same day in 2021, a 30.75% decline.

It said that the Bank of Ghana should “continue to strengthen its internal control systems and supervisory roles on officials who prepare and review the statement to maintain the quality of the report, as this would credibly inform stakeholders’ decision making.”