Dr Johnson Asiama, a former Deputy Governor of the Bank of Ghana (BoG), has pointed out weaknesses in the government’s ‘gold for oil’ initiative, reportedly spearheaded by Vice President Dr Mahamudu Bawumia.
The New Patriotic Party (NPP) presidential candidate introduced the policy dubbed Gold for Oil (G4O) in 2022, with the first oil transaction using gold taking place in 2023.
The program was designed to enable the payment for imported oil products with gold, through a direct barter facilitated by gold acquired by the Central Bank.
The purported aim was to assist the BoG and government in stabilizing the depreciation of the cedi against the dollar and mitigating the surge in fuel prices on the global market.
However, Dr Asiama raised concerns about the program, despite being hailed as successful in stabilizing the cedi, which currently stands at over GHc16 against the dollar, suggesting that it has become a burden for the Central Bank.
He criticized the lack of a clear blueprint for the initiative, emphasizing its opaque nature. Dr Asiama argued that the Central Bank should not have been involved in the program’s implementation from the outset.
Although the Bank funds the initiative, it does not receive the proceeds after the gold is sold by suppliers, highlighting its inefficacy.
Dr Asiama highlighted undisclosed challenges within the program, asserting that the Bank is grappling with issues while the government touts its purported benefits.
“There are significant concerns surrounding the current scheme,” Dr Asiama, who served under the NDC government, stated.
During an appearance on JoyNews program ‘Upfront’ with Raymond Acquah, Dr Asiama, a member of the manifesto committee, disclosed that the proceeds of the transactions do not flow to the BoG but to undisclosed destinations.
He declined to provide specifics. Dr Asiama, who resigned following the Akufo-Addo administration assumption of office, kept his reasons confidential at the time. He lamented that the non-receipt of proceeds has become a major challenge and burden for the Bank.
Discontent is brewing among stakeholders in the extractive industry, with plans to petition Parliament to scrutinize the program.
Dr Asiama argued that the government should explore alternative measures to address the cedi’s depreciation instead of relying on the underperforming ‘gold for oil’ initiative. Addressing potential changes under an NDC government,
Dr Asiama stated that the party would ensure the program’s implementation without the involvement of the Bank of Ghana.
He proposed using a private entity to manage the initiative and emphasized the need for a policy framework, which is currently lacking.
Dr Asiama questioned the absence of a clear strategy for the program’s implementation, highlighting the lack of transparency. He emphasized the importance of transparency in fostering public trust.
The ‘gold for oil’ initiative was introduced amid concerns about the cedi’s depreciation against the US dollar and escalating fuel prices, aiming to stabilize fuel prices and ease pressure on Ghana’s foreign exchange reserves by utilizing direct gold barter for oil imports.