BoT Set to Purchase 12 Tonnes of Gold

SEATTLE (Scrap Monster): The government through the Bank of Tanzania (BoT)’s Domestic Gold Purchasing Programme is expected to purchase about 12 tonnes of gold from domestic miners and businesspersons in this financial year in a bold move aimed at boosting foreign exchange reserves.

Equally, in attracting more dealers to sell their gold to the Central Bank, the government is in the process of reviewing its legislation to reduce royalty from those selling the precious minerals from 9.3 per cent at the BoT to 7.3 per cent which is currently deducted when selling to gold refineries.

The revelation was made here by the Minister for Minerals, Mr Anthony Mavunde during a joint meeting between the government and business stakeholders in the mining sector, which sought to discuss how mineral exports can reflect the country’s economy as well as intensifying foreign exchange reserves.

BoT recently announced the commencement of the Domestic Gold Purchasing Programme aimed at bolstering foreign exchange reserves through acquiring and holding gold.

The announcement came almost six months after the government announced a process to launch a gold reserve in the country, with the then Minister of Minerals Dr Doto Biteko informing the parliament on April 28, 2023, that the regulation for gold purchases was ready.

In its announcement, BoT said it would buy gold from domestic miners and traders in Tanzanian shillings. At the end of the week, Mr Mavunde said that in this financial year 2023/2024, the government had already allocated funds and that it was planning to purchase about 12 tonnes of gold.

However, during the meeting, businesspersons in the mining sector expressed their concerns over the royalty of about 9.3per cent that is deducted when they sell their gemstones at BoT, saying it was too huge to pay compared to 7.3 per cent that is deducted when they sell their products at gold refineries.

Elaborating on efforts currently being undertaken to attract more miners and dealers to sell their products at the country’s central bank, BoT’s Assistant Manager, Financial Markets, Dr Anna Lyimo stated that discussions were currently ongoing between the government and domestic miners and businesspersons in the gold business to amend the legislation so as to reduce 2 per cent of the royalty so that they pay the same amount of 7.3per cent that they are deducted at refineries.

The minister further assured stakeholders in the gold business that BoT will be procuring products depending on the market place in the world on a daily basis.

This means, gold dealers will not be forced to export their products outside the country in search for the best price, as BoT will be buying similar products depending on the market price of the day.

“The main target is to ensure that money obtained from gold remains in the country’s circulation instead of exporting it outside to boost the economies of foreign nations,” said Mr Mavunde.

In a BoT video shared on YouTube recently, the central bank’s governor, Emmanuel Tutuba, said the bank had so far bought 418kg of gold, with the plan being to buy six tonnes of the precious metal in 2023 alone.

Mr Tutuba said BoT sold 418kg of gold to get US dollars to strengthen the country’s economy, adding that the bank had in its reserve other gold as part of its efforts to diversify Tanzania’s foreign currency reserve.

“The government, in its (2023/2024) budget, has set aside money to buy gold, and in this year (2023) alone, we are planning to buy six tonnes of gold,” Mr Tutuba said in the video posted on September 22, 2023.

The recent meeting in Dodoma that was chaired by the Minister for Minerals, was purposely meant to address crucial issues in Tanzania’s mining sector and enhance collaboration between government officials and business stakeholders.

According to the minister, in 2022/2023, the mining sector led all sectors by contributing 56 per cent to the country’s foreign currency reserves and that Tanzania earned around 3.3billion US dollars from minerals exports. However, he noted, the export value does not reflect the country’s economy.

“This is the reason why we have decided to meet today to discuss how best we can ensure the mining sector can provide what is expected in the Gross Domestic Product (GDP), as well as uplifting individual economies of miners and business persons in the sector,” he said.

Courtesy: www.dailynews.co.tz