BoG Governor supports 'Gold for Oil' continuation for economic stability

Governor of the Bank of Ghana, Dr. Ernest Addison, has reaffirmed the central bank's support for the continuation of the 'Gold for Oil' initiative.

Speaking at the Public Accounts Committee of Parliament, Dr. Addison emphasised the programme's significance, especially during unpredictable market conditions.

Responding to Buem MP Mr. Kofi Adams' inquiry on the future of the programme, Dr. Addison pointed out its crucial role during the recent economic crisis.

He suggested that the implementation of the programme could be transitioned to a commercial bank, allowing the central bank to concentrate on its core operations.

Dr. Addison elaborated on the innovative nature of the initiative, which allows the exchange of gold for oil directly, especially when oil prices surge.

While acknowledging the improved state of the foreign exchange market and the reduction in oil prices since 2022, he maintained that the programme remains a vital option for the government.

“It is a programme that we recommend continuing because it helped us in the period of crisis.

“We only want to make sure that this is done by a commercial bank so that we can have time to focus on our operations as a central bank.

“So this is the discussion that we are holding going forward but the ability to be able to exchange our natural resources directly for oil when oil prices get out of hand, we think that it is a very innovative programme.

“So it is really about the central bank spreading itself too thin by trying to add gold for oil to our business but we are fully focused on buying gold to build our reserves,” he said.

The discussion also touched upon the capacity of commercial banks to handle the programme, with Dr. Addison expressing confidence in their ability to manage such activities, should the need arise.

"Yes, the foreign exchange market is functioning better than in 2022. Oil prices have come down much better than they were in 2022 so the situation is much better now than it was in 2022 when the Gold for Oil was indicated.

“However, we think it is still an important programme for the government to have that option and to be able to empower a commercial bank to undertake the activity,” he added.

The 'Gold for Oil' initiative, according to Dr. Addison, is an important strategic tool that provides the government with flexibility in response to fluctuating market sentiments.

ID/MA