Ghana stops paying for oil with gold 

Ghana’s newly appointed central bank governor has suspended the country’s gold-for-oil programme, expressing confidence in the stability of the cedi after last year’s volatility.

“We intend to maintain an appropriate monetary policy stance,” Bank of Ghana Governor Johnson Asiama stated in an interview with Bloomberg on Friday. Alongside fiscal discipline under President John Mahama’s administration, he asserted that such measures “should help us maintain stability in the foreign exchange markets.”

Interest rates currently stand at 27 per cent, while inflation eased to 23.5 per cent in January. Asiama believes that improved monetary and fiscal policy coordination will help curb inflationary pressures as the nation moves beyond the economic turmoil caused by its 2022 debt default. Ghana, Africa’s largest gold producer, secured a $3 billion bailout from the International Monetary Fund (IMF) and underwent a debt restructuring process following its default.

Having depreciated by 19 per cent against the US dollar in 2023, the cedi is expected to avoid the “extreme volatilities” experienced in recent months, according to Asiama.

Gold-for-Oil Programme suspended

The previous government, which Mahama convincingly defeated in the December elections, introduced the gold-for-oil programme as a strategy to counter currency fluctuations. Under this scheme, the central bank purchased gold in local currency and used it to barter or buy oil.

However, the initiative has been put on hold due to financial setbacks. “We have had to incur some losses on that,” Asiama admitted, declining to disclose specifics. “So we’ve put some suspension” on the trade, he said.

Ghana’s oil import bill amounted to $4.5 billion in 2024. By September of that year, the central bank had acquired 65.4 tonnes of gold, with 30.5 tonnes added to its foreign reserves by year-end. Moving forward, Asiama suggested that the central bank might withdraw from gold procurement, transferring responsibilities to a soon-to-be-established Gold Board.

Asiama, who was sworn into office by Mahama on 25 February, is also committed to addressing financial losses at the central bank. The institution recorded a record overspending of 60.9 billion cedis ($3.9 billion) in 2022 due to loan write-downs needed to secure the IMF bailout.

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