NEWS

Ghana to Halt Gold-for-Oil Program

Ghana Halts Gold-for-Oil Program: Central Bank Governor Confident in Cedi Stability

Johnson Asiama, the recently appointed governor of Ghana’s central bank, has said that the country’s gold-for-oil program will be suspended, expressing trust in the cedi’s stability. This decision comes after a time of currency swings and economic instability that led the previous administration to launch the program.

Asiama stressed the Bank of Ghana’s dedication to upholding a prudent monetary policy in an interview with Bloomberg. He declared, “We intend to uphold an appropriate monetary stance,” and added that the foreign exchange market would be stabilized by fiscal restraint under President John Mahama’s direction.

Ghana’s interest rate is currently 27%, and as of January, inflation has decreased to 23.5%. After the nation’s debt default in 2022, Asiama thinks that better coordination between fiscal and monetary policy will assist reduce inflationary pressures and rebuild economic confidence.

The previous government implemented the gold-for-oil scheme as a calculated move to slow down currency depreciation. As part of the program, the Bank of Ghana bought gold with local money and exchanged it for oil. However, because of financial difficulties, the program has now been put on hold.

“We have incurred some losses on that,” Asiama admitted, refraining from disclosing specific figures. “So, we’ve had to put a temporary suspension on the trade.”

In 2024, Ghana spent $4.5 billion a year on oil imports. 30.5 tonnes of gold were added to the central bank’s foreign reserves by September of that year, bringing its total gold holdings to 65.4 tonnes. Asiama proposed that going forward, the central bank might stop buying gold directly and hand off the duties to a future Gold Board.

Asiama has also promised to rectify financial losses at the Bank of Ghana since taking office on February 25. Due to loan write-offs required to get an International Monetary Fund (IMF) bailout, the institution reported overspending in 2022 of 60.9 billion cedis ($3.9 billion).

“I can confidently say that this year, we will not experience such losses,” Asiama stated. “We are implementing the right measures to control operational costs and enhance financial stability.”

Asiama informed Ghanaians that the sharp currency swings of the past several months are unlikely to continue, notwithstanding the cedi’s 19% decline versus the US dollar in 2023. In order to maintain economic development and stop additional financial instability, his economic policy depends on stringent monetary measures and careful fiscal management.

What This Means for Ghana’s Economy

The decision to end the gold-for-oil scheme marks a change in the course of Ghana’s economic strategy. The Bank of Ghana wants to stabilize the local currency and promote long-term economic growth by refocusing on monetary discipline and financial prudence. The planned Gold Board’s acquisition of gold procurement duties could change how the country uses its natural resources to maintain economic stability.

The effectiveness of these measures will be critical in determining Ghana’s financial resilience and investor confidence as it negotiates the post-default economic environment.

Stay tuned for more GOVERNMENT POLICIES in GHANA 2025 !

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