Ghana Stops Paying Oil with Gold

Ghana’s new central financial institution chief has suspended the West African nation’s program of paying for oil with gold and stated he expects the cedi to stabilize after it’s volatility of final 12 months.

“We intend to keep up an acceptable financial coverage stance,” Financial institution of Ghana Governor Johnson Asiama, 56, stated in an interview on Friday. Along with commitments for fiscal self-discipline underneath the administration of President John Mahama, that “ought to assist us keep stability within the overseas change markets,” he stated.

With rates of interest at 27 p.c and inflation easing to 23.5 p.c in January, Asiama stated higher financial and financial policy-coordination ought to assist cool value pressures because the nation places the financial trauma of its 2022 debt default behind it. Africa’s largest gold producer needed to search a $3 billion bailout from the Worldwide Financial Fund and restructure its debt after defaulting on its obligations.

- Advertisement -

After shedding 19 p.c of its worth towards the greenback final 12 months, the governor additionally noticed the cedi avoiding extra of the “excessive volatilities” it has witnessed in latest months.

Countering foreign money swings was the explanation the earlier authorities, which Mahama convincingly beat in December elections, launched the gold-for-oil program, with the central financial institution shopping for gold in native foreign money after which utilizing it to barter or buy oil.

“We now have needed to incur some losses on that,” Asiama, who accomplished his doctorate in economics from the College of Southampton, instructed Bloomberg Tv’s Ondiro Oganga with out giving particulars. “So we’ve put some suspension” on the commerce, he stated.

Ghana’s oil import invoice was $4.5 billion in 2024. As of September, the Financial institution of Ghana had purchased 65.4 tons of gold for its overseas reserves in addition to for the execution of the barter program, with the previous reaching 30.5 tons by the tip of final 12 months.

The central financial institution could take away itself from this system to buy bullion and hand the position to a quickly to be set up Gold Board, he stated.

Asiama, who Mahama swore into workplace on Feb. 25, has vowed to stem loses on the central financial institution after it recorded a report spending overrun in 2022 of 60.9 billion cedis ($3.9 billion) as a result of mortgage write-downs to qualify for an Worldwide Financial Fund bailout.

“I can inform you for positive that for this 12 months we’ll not see a loss occurring,” Asiama stated. “We’re taking the precise measures to regulate operational prices.”