Was Gold for Oil a gamble?
When Ghana’s cedi was in free fall in 2022, the government unveiled an unusual remedy: the gold-for-oil programme. With the currency tumbling against the dollar at the time and fuel prices surpassing 20 cedis per liter, policymakers sought a way to tackle the root cause—Ghana’s dependence on imported petroleum products that sap its foreign reserves.
The plan seemed straightforward: swap dollars for gold to buy oil, thereby reducing demand for foreign currency and easing the cedi’s decline.
Yet, economic principles and past attempts suggested that this might be more a gilded hope than a golden solution. While oil imports could influence exchange rates in the short run, research showed that their long-term impact on currency value was often limited. This raisesed the question: Can the gold-for-oil programme truly rescue the cedi from its nosedive, as the government promises?
The challenge was substantial. Ghana spent about 400 million dollars monthly on oil imports—a heavy toll on its reserves. The gold-for-oil programme, outlined in the 2024 budget, was intended to ease the burden. However, since its implementation in January 2023, it covered only 30% of Ghana’s oil needs—a limited reach that questions its potential impact amid the country’s broader economic challenges.
Moreover, the programme also mandated that small-scale miners sell their gold to the state-run Precious Minerals Marketing Company (PMMC). While this could secure a steady gold supply for oil deals, it inadvertently encouraged smuggling.
On Monday March 3 2025, the Governor of the Bank of Ghana (BoG), Dr Johnson Asiama, announced the suspension of the country’s Gold-for-Oil programme due to unspecified policy and operational challenges.
Dr Asiama also disclosed that the programme had incurred financial losses, necessitating its temporary suspension.
“We have had to incur some losses on that, so we have put some suspension on the trade,” he stated. While he did not elaborate on the specific challenges faced, the suspension reflects broader economic adjustments under the new administration. Despite the halt, Dr Asiama expressed optimism about Ghana’s economic prospects, particularly regarding the stability of the cedi following last year’s volatility.
