Ghana’s Gold-for-Oil Program: A Bold Move or Expensive Misstep?

Introduction

In 2023, Ghana made headlines with its unconventional approach to fuel importation, trading gold instead of U.S. dollars under the “Gold for Oil” program. The aim? To reduce the strain on foreign exchange reserves and stabilize a weakening cedi. But as the numbers roll in, the nation is left evaluating the real cost of this gold-powered gamble.

Ghana's Gold for Oil Program

What Was the Objective?

Ghana’s economy has long grappled with forex shortages that strain its ability to import critical commodities. By using domestically mined gold to pay for oil, the government hoped to reduce dollar demand and ease pressure on the Bank of Ghana’s reserves.

How Much Fuel Was Delivered?

• The first consignment, delivered in January 2023, totaled 40,000 metric tonnes.

• By June 2023, cumulative deliveries had reached 455,000 metric tonnes.

• As of November 2023, the program had supplied about 800,000 metric tonnes, accounting for 30% of Ghana’s fuel imports at the time.

  
  

The exact volume of gold swapped for oil was not fully disclosed publicly. However, the Bank of Ghana dramatically scaled up gold purchases to support the program. BoG’s gold reserves rose from 8.74 tonnes (2021) to over 32 tonnes by 2025.

What Did It Cost?

• The Bank of Ghana committed seed capital worth ₵4.69 billion.

• In terms of financial losses:

  • ₵317 million was recorded in 2023.

  • ₵1.82 billion followed in 2024.

  • Cumulatively, the program incurred ₵2.37 billion in losses by 2024.

    
    

Was It Worth It?

While the initiative succeeded in reducing short-term pressure on the forex market and brought in significant fuel volumes, the cost of maintaining the program raises difficult questions. Could the same results have been achieved through more conventional economic measures? Or was the program a necessary risk in extraordinary times?

Conclusion

Ghana’s Gold for Oil program was an audacious economic maneuver. It reflects the government’s willingness to think outside the box but also underscores the complexity of executing such policies in turbulent macroeconomic conditions. Whether it will be remembered as a stroke of genius or a costly detour remains to be seen.