Gold4Oil: BoG considering implementation by commercial banks

The Bank of Ghana (BoG) is currently considering delegating the implementation of the Gold for Oil (Gold4Oil) Policy to commercial banks.

After two years of the initiative’s implementation, the Central Bank believes that this move will allow them to focus on their core monetary policy functions and maintain price stability.

The Central Bank Governor, Dr. Ernest Addison, believes that the policy will continue to be a strategic solution to boost the country’s reserves. It will also contribute positively to Ghana’s economic stability and development in the long term.

“It is a programme that we recommend to continue 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 resource 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 also into our business but we are fully focused on buying gold to build our reserves”, the Governor said to the Public Accounts Committee in Parliament.

He also reaffirmed its support for the government’s Gold4Oil policy, asserting its importance for the nation despite its limitations.

Dr. Addison highlighted the benefits the Gold4Oil policy has brought since its inception in 2022, pointing out a decrease in oil prices compared to those in 2022.

He suggested that the government could continue to depend on the policy should oil prices rise at the pumps, opposing any potential discontinuation.

“This is an intervention which was very critical in the heat of the crisis, yes the foreign exchange market is functioning better than it was in 2022. Oil prices have come down much better than they were in 2022. The situation is much better now than it was in 2022 when the Gold4Oil policy was introduced.

“However, we think that it’s still an important programme for the government to have that option and to be able to empower commercial banks to undertake their activities. Should market sentiments change, which do every day, we don’t know what will happen tomorrow. And we will wake up and if we find ourselves in a situation where the prices are driving the pumps to where they were again. The government has an option to fall on. It’s a very innovative instrument.”

Dr. Addison also forecasted a significant increase in Ghana’s gold reserves.

“There is going to be a big jump in gold holdings for Ghana,” he assured.

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