Ghana’s central bank has halted its gold-for-oil initiative to stabilize the cedi amid economic volatility. Governor Johnson Asiama is focusing on monetary consistency and fiscal discipline to manage currency depreciation and reduce central bank losses. Analysts suggest shifting investment towards agriculture could further mitigate inflation, emphasizing a broader strategy for economic stabilization.
Ghana’s central bank has decided to suspend its gold-for-oil initiative, a decision articulated by the newly appointed Governor of the Bank of Ghana, Mr. Johnson Asiama. This move is intended to stabilize the Ghanaian cedi, especially in light of the currency’s volatility experienced over the past year. Under Mr. Asiama’s leadership, the bank is taking steps towards strengthening monetary policy to ensure consistency and promote fiscal discipline in collaboration with President John Mahama.
Despite the gold-for-oil initiative’s intention to buffer against currency fluctuations, it has incurred financial losses, leading to its suspension. In 2024, Ghana’s oil imports reached a staggering $4.5 billion, while its gold reserves were reported at 30.5 tons. The cedi has seen a 5% depreciation against the dollar this year, trading at approximately 15.5 cedis per dollar.
Governor Asiama is focused on controlling operational costs, following the bank’s significant losses exceeding 60 billion cedis in 2022 attributed to loan write-downs for an IMF bailout. Economic analysts, including Godfred Bokpin from the University of Ghana Business School, emphasize the necessity of altering investment strategies, advocating for increased investment in agriculture to better address inflation, which could potentially drop to 13% by year-end.
As part of restructuring, the central bank is contemplating the establishment of a new Gold Board to take over purchasing duties. The broader economic context reflects an urgent need for comprehensive strategies to stabilize the cedi and restore confidence in Ghana’s fiscal policies amidst fluctuating global markets.
In summary, the suspension of Ghana’s gold-for-oil program is a critical step aimed at stabilizing the cedi and addressing the nation’s economic challenges. The new Governor’s focus on fiscal discipline and policy consistency combined with the call for agricultural investment highlights a comprehensive approach required for long-term stability. As the central bank adjusts its strategies, significant attention will be needed to ensure the country’s currency and economic frameworks are effectively managed going forward.
Original Source: www.indexbox.io
