Dr. Johnson Asiama, new Bank of Ghana (BoG) Governor, has announced the suspension of the country’s Gold-for-Oil programme due to operational challenges. The initiative was originally designed to reduce reliance on foreign exchange for fuel imports and stabilise domestic fuel prices.
In an interview with Bloomberg, Dr. Asiama disclosed that the programme had incurred financial losses necessitating its temporary suspension. However, he did not elaborate on the specific challenges but was quick to express optimism about the economy’s prospects with regard to stability of the local currency – the Ghana cedi.
He expressed optimism that with prudent fiscal management and discipline while maintaining an appropriate monetary policy, the country’s economic prospects will remain positive.
Asiama reaffirmed the central bank’s commitment to ensuring effective economic management while addressing challenges that led to the programme’s suspension.
Recognising forex shortages and exchange rate issues as key contributors to price hikes, government implemented the Gold for Oil programme to stabilise the economy and alleviate impacts from soaring fuel prices.
The programme’s overarching goal was to stabilise fuel prices and reduce dependency on foreign currencies for oil imports, promoting economic stability and self-sufficiency. By intentionally excluding the exchange rate from the pricing formula for fuel and utilities, domestic fuel vendors are relieved of the requirement for foreign currency when importing petroleum products.
However, the Gold for Oil (G4O) programme faced criticism from Civil Society Organisations and petroleum experts, notably including Em. Prof. Iledare Wumi, Dr. Steve Manteaw and Imani Ghana. They voiced concerns about the programme’s lack of transparency and perceived interference of government in a deregulated market.
Deals made under the G4O programme were shrouded in secrecy, raising potential worries about corrupt practices – and the role of middlemen in its transactions has become a prominent point of discussion,
Also, sceptics highlighted a significant concern regarding the programme’s long-term sustainability, emphasising the need for a continuous and sufficient supply of gold to support the exchange for oil.
Moreover, critics of the policy are of the view that the decrease in prices at the pump is because of a decrease in world market prices.
