Bank of Ghana Confirms Steady Progress of Government’s Gold for Oil Initiative
The Bank of Ghana has confirmed that the government’s Gold for Oil policy is progressing as planned, the policy is a crucial element of the country’s broader strategy to stabilize its currency and manage foreign exchange pressures.
The initiative, launched to counteract the depletion of Ghana’s foreign currency reserves and alleviate the high demand for dollars from oil importers, has been a pivotal measure in supporting the Cedi and controlling inflationary pressures.
In a recent session before the Public Accounts Committee on August 12, 2024, Dr. Maxwell Opoku-Afari, the First Deputy Governor of the Bank of Ghana, outlined the program’s status.
He emphasized that the Central Bank’s financial exposure to the initiative is capped, and the continuation of the program is being funded through receivables within this limit, ensuring disciplined financial management.
“The gold for oil programme is on track and the reason why the risk for the separate account is mitigated somehow is that the Central Bank’s participation in terms of financial contribution to the gold for oil is capped and nothing more is being added to that.
“So it is the receivables that are coming from within that cap amount that has been used to continue to finance the gold for oil programme,” he noted.
The Gold for Oil policy, detailed in the government’s February 2023 G40 Programme Framework, allows for the acquisition of oil imports through a dual-channel approach.
The first channel involves direct barter, where suppliers are compensated with gold by the BoG in exchange for petroleum products.
The second channel operates through a broker system, where the Central Bank sells gold to a broker, who in turn provides the necessary foreign exchange to finance oil imports.
The Gold for Oil policy underscores the government’s strategic use of Ghana’s gold reserves to mitigate external vulnerabilities, reducing the reliance on the US dollar and providing a buffer for the local currency amidst global economic uncertainties.
