Ghana’s new central bank chief has suspended the West African nation’s program of paying for oil with gold and said he expects the cedi to stabilize after it’s volatility of last year.
“We intend to maintain an appropriate monetary policy stance,” Bank of Ghana Governor Johnson Asiama, 56, said in an interview on Friday. Together with commitments for fiscal discipline under the administration of President John Mahama, that “should help us maintain stability in the foreign exchange markets,” he said.
With interest rates at 27% and inflation easing to 23.5% in January, Asiama said better monetary and fiscal policy-coordination should help cool price pressures as the country puts the economic trauma of its 2022 debt default behind it. Africa’s biggest gold producer had to seek a $3 billion bailout from the International Monetary Fund and restructure its debt after defaulting on its obligations.
After losing 19% of its value against the dollar last year, the governor also saw the cedi avoiding more of the “extreme volatilities” it has witnessed in recent months.
Countering currency swings was the reason the previous government, which Mahama convincingly beat in December elections, introduced the gold-for-oil program, with the central bank buying gold in local currency and then using it to barter or purchase oil.
“We have had to incur some losses on that,” Asiama, who completed his doctorate in economics from the University of Southampton, told Bloomberg Television’s Ondiro Oganga without giving details. “So we’ve put some suspension” on the trade, he said.
Ghana’s oil import bill was $4.5 billion in 2024. As of September, the Bank of Ghana had bought 65.4 tons of gold for its foreign reserves as well as for the execution of the barter program, with the former reaching 30.5 tons by the end of last year.
The central bank may remove itself from the program to purchase bullion and hand the role to a soon to be establish Gold Board, he said.
Asiama, who Mahama swore into office on Feb. 25, has vowed to stem loses at the central bank after it recorded a record spending overrun in 2022 of 60.9 billion cedis ($3.9 billion) due to loan write-downs to qualify for an International Monetary Fund bailout.
