Ghana’s newly appointed central bank governor Johnson Asiama has suspended the country’s gold-for-oil program amid the cedi’s increasing stability and commitment to sound monetary policies.
In an interview, Asiama expressed confidence in Ghana’s economic trajectory under President John Mahama. He stressed that maintaining appropriate monetary policy and fiscal discipline would help maintain stability in the foreign exchange market.
Ghana’s interest rate currently stands at 27%, with inflation down to 23.5% as of January. Asiama believes that better coordination between monetary and fiscal policies could further reduce inflationary pressures and enable the country to avoid a 2022 debt default. Ghana, Africa’s largest gold producer, previously secured a $3 billion International Monetary Fund (IMF) bailout and underwent a debt restructuring process.
According to the governor, the cedi is expected to avoid the extreme volatility seen in recent months after losing 19% against the US dollar in 2023.
Suspension of Gold-for-Oil Initiative
The gold-for-oil programme launched by the previous government to counter currency volatility was temporarily suspended due to financial setbacks. The initiative involved the central bank buying gold in local currency and using it to exchange or buy oil.
Asiama acknowledged that the programme had led to financial losses but declined to provide details. “We had to bear some losses because of this, so we suspended the trade,” he said.
In 2024, Ghana’s oil import bill was set to reach $4.5 billion, while the central bank purchased 65.4 tonnes of gold and added 30.5 tonnes to its foreign exchange reserves by the end of the year. Looking ahead, Asiama hinted that the central bank could back away from gold procurement and shift responsibilities to the proposed Gold Board.
Asiama has also prioritized addressing financial losses at the central bank since taking office on Feb. 25. The institution recorded a record overspend of 60.9 billion cedis ($3.9 billion) in 2022 due to credit reductions required for the IMF bailout.
“I can say with certainty that we will not see a loss this year,” he assured, adding that measures were being implemented to control operational costs.