Ghana Suspends Gold-for-Oil Program Amid Economic Adjustments

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KEY POINTS

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• Ghana has suspended its gold-for-oil program due to financial setbacks.
• The cedi is expected to stabilize after last year’s currency volatility.
• The Bank of Ghana is considering transferring gold management to a new Gold Board.

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Ghana has suspended its gold-for-oil program, a policy that allowed the country to use domestically purchased gold to secure petroleum imports.

Newly appointed Bank of Ghana Governor Johnson Asiama announced the decision, citing confidence in the stability of the cedi and a need to reassess financial strategies.

Speaking in an interview with Bloomberg, Asiama emphasized that the current monetary policy stance and fiscal discipline under President John Mahama’s administration would help stabilize the foreign exchange market.

“We intend to maintain an appropriate monetary policy stance,” he stated, adding that such measures should reduce currency fluctuations and inflationary pressures.

With interest rates at 27 percent and inflation easing to 23.5 percent in January, the central bank is now focused on maintaining financial stability as the country continues to recover from economic turmoil following its 2022 debt default.

Reasons behind the gold-for-oil suspension

The gold-for-oil initiative was introduced by the previous administration as a way to manage foreign exchange volatility and reduce Ghana’s dependence on the U.S. dollar for fuel purchases.

Under the program, the central bank acquired gold using local currency and then exchanged it for oil imports.

However, Asiama revealed that the policy had resulted in financial setbacks, prompting the decision to halt it. “We have had to incur some losses on that,” he admitted, without disclosing specifics.

The move comes as part of broader efforts to stabilize the economy, with the central bank now considering a shift in its gold management strategy.

Moving forward, Asiama indicated that the Bank of Ghana might step back from directly procuring gold, instead transferring those responsibilities to a soon-to-be-established Gold Board.

According to Graphic Online, the new framework is expected to regulate gold purchases more efficiently while reducing the financial burden on the central bank.

Ghana’s economic outlook and monetary policy shift

The African gold production leader Ghana has strived to overcome major economic problems since its financial crisis, which led to a $3 billion IMF bailout and debt readjustment efforts.

Asiama remains hopeful that the currency market turbulence against the U.S. dollar is over despite the recent 19 percent cedi devaluation in 2023.

He assured that 2025 will see stronger economic discipline, particularly in controlling financial losses at the Bank of Ghana, which recorded a record overspending of 60.9 billion cedis ($3.9 billion) in 2022 due to loan write-downs required for the IMF bailout.

“I can tell you for sure that for this year, we’ll not see a loss occurring,” Asiama said. “We are taking the right measures to control operational costs.”

As the gold-for-oil program is put on hold, Ghana’s government remains focused on maintaining economic stability, strengthening reserves, and improving fiscal policies.

While the policy suspension signals a shift in strategy, authorities remain committed to ensuring energy security and sustainable economic recovery.