The Bank of Ghana has revealed that it lost GH¢317 million in 2023 and GH¢1.82 billion in 2024 as a result of the Gold for Oil (G4O) program since it was launched in January 2023.
That raises the two-year cumulative losses to GH¢2.137 billion.
By injecting GH¢4.69 billion into the program, the central bank effectively lost 45% of the cash it had used to maintain the cedi and stabilize petroleum prices.
On March 13, 2025, the Bank formally terminated the Gold for Oil program, mostly due to the significant financial losses incurred.
Diesel was selling for up to GH¢23 per liter and petrol for about GH¢17 at GOIL stations in November 2022. In response, Gold for Oil (G4O) was implemented in December 2022.
The government and the Bank of Ghana were compelled to take a different approach due to the rapid depletion of foreign reserves and the significant depreciation of the cedi: buying petroleum goods from the international market using gold rather than dollars.
The program’s reasoning made perfect sense. Ghana wanted a solution to its dollar deficit that wouldn’t accelerate currency depreciation or further deplete the Bank of Ghana’s reserves.
The intention was to protect limited foreign exchange reserves in order to reduce pressure on the cedi.
Ghana is a significant contributor to dollar demand, spending over $400 million on petroleum imports each month.
A key component of the program’s reasoning was lowering that pressure, even just a little.
In order to purchase gold doré from local miners in cedis and refine it overseas for Ghana’s official reserves, the Bank had already started a domestic gold purchase program in June 2021 in collaboration with the Precious Minerals Marketing Company (PMMC), which has since changed its name to GoldBOD.
Ghana’s gold reserves, which were 8.74 tons at the time, were to be doubled in five years.
Central bank data shows that the gold stockpile has nearly quadrupled in less than four years, currently totaling more than 32 tons.
A later addition to the domestic gold purchasing scheme was the Gold for Oil framework.
The Bank purchased gold in cedis from miners through PMMC, gave it to a “gold broker,” and had it sold abroad.
After selling the gold for US dollars, the broker sent the money straight to the Bank’s offshore (nostro) accounts. Products related to petroleum were bought using these monies.
Ghana received the fuel, but the money that was used to purchase it was still abroad. Therefore, there was no direct foreign exchange infusion into the local economy.
Notably, parliament never had a chance to review the full arrangement. The ruling government at the time maintained that the Gold for Oil program did not need parliamentary approval because it was a central bank initiative rather than an executive policy.
The selection procedures, fees, and number of intermediaries used to choose these gold brokers have not been made public.
Fuel costs decreased, and the cedi stabilized in the months following the introduction of G4O.
The decreased dollar demand from oil importers probably helped to ease exchange rate pressure, even though it’s difficult to separate the program’s immediate effects from those of the IMF agreement agreed to in May 2023.
At the 2024 budget presentation, then-Finance Minister Ken Ofori-Atta informed Parliament that G4O was responsible for over 30% of petroleum imports by November 2023, nine months in.
Up until the publication of the Bank’s 2024 financial report, there were no significant updates.
Foreign exchange losses account for the majority of the GH¢2.1 billion deficit, according to the Bank.
However, important information is still lacking, like the amount of gold purchased, the fuel provided, the commissions paid, the middlemen engaged, and the program’s overall effect.
Gold for Oil has proven to be an expensive intervention, with reported losses of over GH₵2.1 billion and a lack of openness regarding its operations.
In the end, it left a significant hole in the Bank of Ghana’s accounts, even though it may have provided short-term foreign exchange relief and cheaper fuel.
Source: newsthemegh.com