Ghana Halts Gold-for-Oil Program as New Central Bank Head Takes Over

Starfolk

Starfolk

March 03, 2025 · 3 min read
Ghana Halts Gold-for-Oil Program as New Central Bank Head Takes Over

Ghana's new central bank governor, Johnson Asiama, has suspended the country's program of using gold to pay for oil, citing losses incurred under the scheme. Asiama, who took office on February 25, expressed confidence that the cedi will stabilize following last year's volatility.

The gold-for-oil program was introduced by the previous government to counter currency fluctuations. Under the scheme, the central bank bought gold using local currency and then used it for bartering or purchasing oil. However, Asiama stated that the program has resulted in losses, without providing specific details.

As of September, the Bank of Ghana had acquired 65.4 tons of gold for its foreign reserves and the barter program, with reserves totaling 30.5 tons by the end of the year. The country's oil import bill reached $4.5 billion in 2024. Asiama hinted that the central bank may withdraw from purchasing bullion and transfer the responsibility to a soon-to-be-established Gold Board.

Asiama's decision to suspend the program is part of his efforts to maintain an appropriate monetary policy stance and curb losses at the central bank. The bank recorded a record spending overrun of 60.9 billion cedis ($3.9 billion) in 2022, driven by loan write-downs required to secure an International Monetary Fund bailout.

The new central bank governor's commitment to fiscal discipline under President John Mahama's administration is expected to help reduce price pressures as Ghana moves past the economic turmoil of its 2022 debt default. With interest rates at 27% and inflation easing to 23.5% in January, improved coordination between monetary and fiscal policies is seen as crucial to maintaining stability in the foreign exchange markets.

The suspension of the gold-for-oil program marks a significant shift in Ghana's economic strategy, and its implications will be closely watched by investors and economists. As the country navigates its way through economic recovery, Asiama's leadership and policy decisions will be crucial in shaping Ghana's economic future.

In the broader context, Ghana's decision to halt the gold-for-oil program raises questions about the effectiveness of such schemes in stabilizing currencies and managing foreign exchange reserves. As countries continue to explore innovative solutions to mitigate the impact of currency fluctuations, the Ghanaian experience will serve as a valuable case study.

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