Due to financial losses and policy issues, Ghana’s Gold-for-Oil (G4O) program has been terminated by Dr. Johnson Asiama, the country’s new central bank governor. The initiative was put in place to reduce the strain on Ghana’s foreign exchange reserves and stabilize fuel prices.
Launched in 2022, the G4O enabled Ghana to buy oil using gold that was mined domestically rather than using US dollars.
However, this suspension most often results from difficulties maintaining the program, such as problems with the supply of gold, financial limitations, or shifting market conditions. The government might still be looking for alternative strategies to control fuel costs and foreign exchange reserves, though.
The BoG stated that the program’s operational and policy issues led to a reevaluation of its feasibility.
Another issue is the currency stability. Since the goal of the G4O program was to reduce dependency on foreign exchange for oil imports, the suspension might have an impact on cedi stabilization tactics.
In 2024, Ghana spent $4.5 billion on oil imports. In the absence of the G4O program, the nation might have to switch back to buying oil with foreign money, which could have an effect on foreign reserves.
By September 2024, the central bank had purchased 65.4 tons of gold for the barter program and reserves. The suspension might therefore prompt a review of gold reserve management plans.
Dr. Asiama has voiced hope that President John Mahama’s administration can stabilize the cedi through prudent fiscal management and suitable monetary policy.
