Bank of Ghana (BoG) Governor, Dr Johnson Asiama, has announced Ghana’s breakaway from its Gold-for-Oil programme, that the former Akufo Addo led government committed the country to, due to what the governor has described as unspecified policy and operational challenges.
A program that allowed Ghana to pay with gold (since it has the resource in abundance) for oil it buys was put into effect with a variety of purposes but one crucial is the stabilization of domestic fuel prices but turned to hand the West African economy heavy financial losses over the nearly 3-year into effect.
With Ghana already suffering from financial crisis and external debt, some of its economic reviving strategies including Gold-for-Oil program which aims to cut down import cost of oil in the energy sector may need to be halted.
According Dr. Asiama, the decision to suspend the Gold-for-Oil programme marks a significant shift in the country’s economic strategy. The program running started by Akufo Addo’s administration was originally designed to reduce the country’s reliance on foreign exchange for fuel imports and to stabilise domestic fuel prices.
Dr Asiama, who made the disclosure during an interview with an international news agency, Bloomberg, explained that Ghana’s Gold-for-Oil programme had incurred financial losses, necessitating its temporary suspension.
“We have had to incur some losses on that, so we have put some suspension on the trade,” he reiterated.
Although the Gold-for-Oil programme has been put on ice, the BoG Governor was optimistic about Ghana’s economic prospects, particularly regarding the stability of the Cedi following last year’s volatility.
He said the country’s central bank would uphold a prudent monetary policy to support fiscal discipline.
“We intend to maintain an appropriate monetary policy stance. Together with commitments to fiscal discipline under the administration of President John Mahama, this should help us maintain stability in the foreign exchange markets,” he remarked.
The suspension of the Gold-for-Oil programme signals a reassessment of economic policies, with the BoG exploring alternative measures to sustain fuel price stability.
Dr Asiama reaffirmed the central bank’s commitment to ensuring effective economic management while addressing the challenges that led to the programme’s suspension.
Ghana’s decision to enter into such kind of business deal with US, China and some African countries, where gold reserves were used to buy oil in order to reduce the demand for US dollars and stabilizes the cedi, has never attracted the public.
Heavy criticisms were significant in the pre and during the implementation of the G4O policy introduced in December 2022.
Major institutions linked with fuel in Ghana have praised the suspension of the policy.
The Executive Secretary of the Chamber of Petroleum Consumers (COPEC), Duncan Amoah, has commended the Governor of the Bank of Ghana, Dr. Johnson Asiama, for suspending the Gold-for-Oil programme.
“It is not shocking or surprising. If anything, the suspension came a bit late, but we understand that certain administrative processes had to be followed,” Duncan Amoah said in an interview with Citi FM.
The Executive Secretary of COPEC further urged the government not to introduce another similar initiative in an attempt to control fuel prices. Instead, he called for a focus on revamping Ghana’s refinery to reduce the country’s reliance on petroleum imports.
“The Gold-for-Oil programme was never going to be the solution to Ghana’s fuel price fluctuations. It was unsustainable and unsafe. Kudos to the new governor for suspending it, but I hope they don’t introduce another scheme. The real solution is to fix our refineries. That way, Ghanaians can rest assured that we are refining our petroleum products instead of relying on imports.”
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