Ghana’s newly appointed central bank governor, Johnson Asiama, has announced the suspension of the gold-for-oil program, signaling a shift in the country’s economic strategy. The move comes as part of broader efforts to stabilize the cedi and maintain a disciplined monetary policy stance under President John Mahama’s administration.
Key Economic Indicators and Policy Shifts
• Gold-for-oil program suspended as the central bank reassesses its impact.
• Interest rates remain at 27%, while inflation eased to 23.5% in January.
• Bank of Ghana aims to stabilize the cedi and reduce economic volatility.
Governor Asiama stated, “We intend to maintain an appropriate monetary policy stance. Along with fiscal discipline, this should help us maintain stability in the foreign exchange markets.”
Why Was the Gold-for-Oil Program Suspended?
The gold-for-oil program was introduced by the previous government to counter currency fluctuations by purchasing gold with local currency and using it for bartering or purchasing oil. However, the Bank of Ghana incurred losses from the scheme, prompting Asiama to put it on hold while reviewing its effectiveness.
“We have had to incur some losses on that,” Asiama told Bloomberg, without providing specific figures. He added that the central bank may withdraw from purchasing gold, shifting the responsibility to a soon-to-be-established Gold Board.
Impact on Ghana’s Economy
Ghana’s oil import bill reached $4.5 billion in 2024, and by September, the Bank of Ghana had acquired 65.4 tons of gold for its foreign reserves and barter program. However, by the end of the year, only 30.5 tons remained in reserves, highlighting potential inefficiencies in the program.
With Ghana recovering from its 2022 debt default, improved coordination between monetary and fiscal policies is expected to help reduce price pressures. Asiama also pledged to curb central bank losses, after it recorded a 60.9 billion cedis ($3.9 billion) spending overrun in 2022, largely due to loan write-downs required for an International Monetary Fund (IMF) bailout.
What’s Next for Ghana’s Monetary Policy?
Asiama, who was sworn into office on February 25, has emphasized a focus on economic stability, promising measures to reinforce Ghana’s financial position. With interest rates steady at 27% and inflation showing signs of easing, his leadership will be closely watched as Ghana navigates its post-crisis recovery.
