BoG Limits Allocation to ‘Gold for Oil’ Policy in Accordance with IMF Directive

The Bank of Ghana (BoG) has announced that it has imposed a cap on its allocations for the ‘Gold for Oil’ programme, adhering to the directives set by the International Monetary Fund (IMF).

In 2022, the BoG entered into an agreement with the Precious Minerals Marketing Company (PMMC) to utilize a portion of its resources from the Domestic Gold Purchase programme to provide foreign currency for the importation of petroleum products. This initiative aimed to ensure a steady supply of fuel, reduce fuel prices at the pumps, and alleviate pressure on the Ghanaian cedi.

However, the Auditor-General’s 2023 report raised concerns about the absence of a formal agreement between the BoG and PMMC to support the contract.

Dr. Maxwell Opoku-Afari, the First Deputy Governor of the Bank of Ghana, explained the reasons behind the lack of a formal agreement at the start of the programme.

“We leveraged the Gold Purchasing Programme to acquire more gold for the ‘Gold for Oil’ initiative, and established a Memorandum of Understanding (MOU) with PMMC to facilitate this. This occurred during a period of crisis. We then initiated the process of formalizing agreements, which involved discussions with PMMC and other stakeholders,” Dr. Opoku-Afari stated.

“The auditors pointed out that the MOU was insufficient and recommended that it be formalized under a separate Gold Purchase Programme agreement, given that this initiative deviates from the traditional Gold Purchase Programme for reserves. Consequently, we have since put in place a formal agreement, which has now been signed.”

Dr. Opoku-Afari noted that the Central Bank initially believed the contract was covered under the existing ‘Gold for Reserve’ agreement.