Ghana’s Gold-for-Oil Programme Leaves Central Bank Nursing Heavy Losses

Ghana’s Gold-for-Oil Programme Leaves Central Bank Nursing Heavy Losses

The Central Bank has incurred losses amounting to hundreds of millions of dollars due to its involvement in the Gold-for-Oil scheme, according to Bright Simons, Vice President of policy think tank IMANI Ghana and founder of mPedigree.

The programme, designed to ease foreign exchange pressures by using gold reserves to purchase fuel, has exposed the Bank of Ghana (BoG) to significant market risks, Mr Simons said. He argued that fluctuations in gold prices and inefficiencies in the procurement process had contributed to the losses by the central bank.

“The Bank of Ghana has taken on enormous market risk under this scheme, unlike private-sector players who hedge against volatility, the central bank is fully exposed to mispricing and adverse market movements,” said Mr Simons in an X Space discussion hosted by NorvanReports and the Economic Governance Platform (EGP) on February 15, 2025, on the topic “Gold for Oil Collapse: What Next For Ghana’s Energy and Forex Strategy”. 

The BoG has reportedly acquired gold worth $9bn under the scheme—equivalent to approximately GHS130bn at prevailing exchange rates—through the Precious Minerals Marketing Corporation (PMMC) and designated aggregators such as Asanska, which source gold from small-scale miners.

However, Mr Simons has questioned the transparency of these transactions, noting that PMMC’s financial statements do not reflect dealings of this magnitude.

“PMMC’s reported annual revenue has remained stagnant at around $3m over the past four years,” he said. “This raises serious questions about the actual flow of funds and whether alternative channels are being used.”

He also pointed to persistent discrepancies between Ghana’s official gold export figures and import records from key trading partners, particularly the United Arab Emirates (UAE). The gap, he said, suggests significant volumes of under-declared or illicit gold trade.

Moreover, some UAE refiners linked to Ghana’s gold exports have reportedly been blacklisted, potentially undermining the credibility of the BoG’s gold holdings. If the reserves are not certified by globally recognized entities, they could be traded at a discount in international markets, further eroding their value.

The Gold-for-Oil programme, introduced as a means to stabilize fuel prices and reduce Ghana’s dependence on foreign exchange reserves, has faced mounting scrutiny over its long-term viability and governance framework.

The new administration has, however, signaled its intention to scrap the Gold-for-Oil initiative and replace it with a new initiative known as the Ghana Gold Board (GoldBod).

The GoldBod will serve as the sole buyer of gold from legal small-scale miners through licensed aggregators, as well as the sole assayer, seller, and exporter of gold in the country. The GoldBod is expected to reduce gold smuggling, improve foreign exchange accumulation, and support the stabilization of the Cedi.