Former Vice President Dr Mahamudu Bawumia has attributed the Bank of Ghana’s ability to inject substantial foreign exchange into the market to the success of the Gold-for-Reserves programme, which he said removed earlier International Monetary Fund (IMF) restrictions on central bank interventions.
Speaking on Thursday during a meeting with members of the Ghana Small-Scale Miners Association in Accra, Dr Bawumia explained that under the IMF-supported programme, the Bank of Ghana faced a strict limit on the amount of foreign exchange it could use to support the cedi.
“One of the restrictions for the IMF programme that we engaged in was the amount of foreign exchange that the central bank could use to intervene to support the cedi. We were given a maximum of $80 million a month,” he said.
He noted that the constraint left the economy with limited options as the local currency depreciated almost daily.
“So, we were really constricted in terms of availability of foreign exchange. And at the same time, the cedi was depreciating almost on a daily basis,” he said.
Dr Bawumia revealed that the build-up of foreign exchange reserves through the Gold-for-Reserves initiative changed the situation.
“Because we had built up the foreign exchange reserves through Gold-for-Reserves, that restriction was removed. And since then, the Bank of Ghana has been able to put in at least $1 billion a month in the market.”
He underscored the scale of the shift: “From $80 million maximum per month ($960 million per year) to $1 billion a month! We couldn’t even do $1 billion a year before.”
The remarks came as Dr Bawumia engaged small-scale miners on challenges in the sector and reforms aimed at promoting responsible mining, environmental protection, job creation and greater local value addition.
The meeting formed part of ongoing consultations by the New Patriotic Party’s Identifiable Groups Committee on the Extractive Sector.
The Gold-for-Reserves programme, a component of the broader Domestic Gold Purchase Programme, has been credited with significantly boosting Ghana’s official gold-related foreign exchange inflows and supporting reserve accumulation in recent years.
Source: StarrFm
