Dr Mahamudu Bawumia
Vice President Dr. Mahamudu Bawumia has announced a bold plan to stabilise Ghana’s currency, the Cedi, by anchoring its value to gold.
Speaking at the inauguration of the Royal Ghana Gold Refinery in Accra on Thursday, he emphasised that gold is the best anchor for the Cedi.
His remarks come as the Cedi continues to face volatility in the foreign exchange market.
Dr. Bawumia, who is also the 2024 New Patriotic Party (NPP) flagbearer, argued that the proposed new foreign exchange regime management architecture for Ghana would provide a stable store of value, reduce inflation, and increase economic growth.
“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.
“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 channeled 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,” he explained.
Dr. Bawumia disclosed that the initiative is designed to meet the demands of foreign exchange while maintaining a stable exchange rate. “It is just a simple use of our gold reserves to meet the demands of forex,” he said.
According to him, by anchoring the Cedi to gold, Ghana aims to reduce its reliance on foreign currencies and establish a more stable financial system.
He stated that the move is expected to provide a long-term solution to the country’s exchange rate volatility, which has been a major challenge for businesses and investors.
Dr. Bawumia emphasised that the gold-backed currency regime will not only stabilise the exchange rate but also free up additional foreign exchange reserves for other critical development projects.
“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,” he noted.
The Vice President expressed confidence that the initiative will drive economic growth and development, while maintaining long-term exchange rate stability. “We will maintain long-term exchange rate stability, which will be anchored on gold, and then we will move forward,” he said.
Governor of the Bank of Ghana, Dr. Ernest Addison, observed that the establishment of Royal Gold Ghana Limited (RGGL), a local gold refinery, is set to enhance Ghana’s gold industry and support the country’s economy.
He noted that the refinery will provide a significant boost to the Bank of Ghana’s successful Domestic Gold Purchase Programme (DGPP).
Since its inception, the programme has accumulated sizable foreign exchange buffers, exceeding expectations under the IMF programme, he added.
According to him, the bank has purchased 65.4 tons of gold, valued at US$5.07 billion, with 23 tons bought this year alone, worth US$1.8 billion.
Dr. Addison emphasised that the programme, combined with other donor disbursements, positions the central bank to support Ghana’s external payments obligations.
He also stated that gold is the biggest export commodity, with estimated export profits of about $10 billion by the end of 2024.
By Ernest Kofi Adu