Ghana’s newly appointed central bank governor, Johnson Asiama, has suspended the country’s gold-for-oil program, signaling a shift in economic strategy under President John Dramani Mahama.
The move comes as the nation seeks to stabilize the cedi after a turbulent 2024 and reduce financial losses incurred under the controversial barter arrangement.
According to a Statements signed by the governor emphasized the Bank of Ghana’s commitment to monetary policy discipline, fiscal coordination, and exchange rate stability.
“We intend to maintain an appropriate monetary policy stance,” Asiama stated. “Together with commitments for fiscal discipline under President Mahama’s administration, that should help us maintain stability in the foreign exchange markets.”
Ghana’s currency lost 19% of its value against the US dollar last year, but Asiama expressed optimism that extreme fluctuations would subside. His confidence stems from declining inflation, which eased to 23.5% in January, and an interest rate currently set at 27%.
The country is still recovering from its 2022 debt default, which led to a $3 billion International Monetary Fund (IMF) bailout and a major debt restructuring effort. Asiama, who earned his Ph.D. in Economics from the University of Southampton, vowed to curb central bank losses and improve financial management.
Gold-for-Oil Program Halted Amid Losses
Introduced by the previous administration, the gold-for-oil program aimed to reduce reliance on foreign exchange reserves by purchasing gold in local currency and using it to barter for oil. However, Asiama revealed that the initiative had resulted in financial setbacks.
“We have had to incur some losses on that,” he told Bloomberg Television’s Ondiro Oganga, without disclosing specific figures. “So we’ve put some suspension on the trade.”
Ghana’s oil import bill reached $4.5 billion in 2024, while the central bank had acquired 65.4 tons of gold for reserves and the barter program. Moving forward, Asiama hinted that the Bank of Ghana could step back from direct gold purchases, with a soon-to-be-established Gold Board assuming that responsibility.
Fiscal Discipline and Future Outlook
Asiama, who was sworn into office on February 25, has pledged to stem losses at the central bank, which recorded a record spending overrun of 60.9 billion cedis ($3.9 billion) in 2022 due to loan write-downs required for the IMF bailout.
“I can tell you for sure that for this year, we will not see a loss occurring,” Asiama assured. “We are taking the right measures to control operational costs.”
The decision to halt the gold-for-oil initiative marks a significant policy shift, as Ghana recalibrates its economic strategy under new leadership. With a focus on currency stability, inflation control, and fiscal discipline, the Bank of Ghana is positioning itself for a more sustainable financial future.
Source :www.kumasimail.com
