Gold for oil policy still on track – BoG

The Bank of Ghana (BoG) has asserted that the government’s Gold for Oil policy is progressing as planned.

The initiative was launched by the government to address Ghana’s depleting foreign currency reserves and the high demand for dollars by oil importers, which was exerting downward pressure on the Cedi and driving up living costs.

During an appearance before the Public Accounts Committee of Parliament on Monday, August 12, the First Deputy Governor of the Bank of Ghana, Dr. Maxwell Opoku-Afari provided an update on the policy.

“The gold for oil programme is on track and the reason why the risk for the separate account is mitigated somehow is that the Central Bank’s participation in terms of financial contribution to the gold for oil is capped and nothing more is being added to that.

“So it is the receivables that are coming from within that cap amount that has been used to continue to finance the gold for oil programme.”

The Gold for Oil policy, as explained by the government, is to allow the government to pay for imported oil products with gold, in a direct barter with gold purchased by the Central Bank.

According to the government’s G40 Programme Framework dated February 3, 2023, which explains the policy, payment for the oil supply is done in two channels; barter trade or via forex obtained from selling gold to a broker.

Under the barter channel, suppliers willing to take gold in direct exchange for petroleum products will be provided with the equivalent volume of gold by the Bank of Ghana (BoG).

Under the Broker Channel, the BoG executes a gold supply agreement under which it sells gold to a gold broker, which provides forex cover to pay for petroleum products.

Source: CNR