Ghana to review Gold-for-Oil as IMF proffers stricter monetary financing limits

Government will take steps to review gold purchases as well as the Gold-for-Oil program and its associated risk for the Bank of Ghana (BoG).

According to the International Monetary Fund (IMF) 2023 report, there will be an amendment to the BoG Act that will feature a stricter limit for monetary financing, mechanisms to monitor and enforce compliance, and a clear definition of emergency situations under which the limit can be temporarily lifted.

Pending legislative changes, the BoG and the Finance Ministry signed an MoU (prior action) to eliminate monetary financing during the programme.

An ongoing updated Safeguards Assessment will provide additional support for designing changes to the BoG Act, most importantly government’s gold purchase and gold-for-oil programs and associated risks for the BoG.

The BoG’s balance sheet will be affected by the debt restructuring. The Government and the BoG will assess the impact and develop plans for its recapitalization with Fund technical assistance support.

The central bank has indicated that with regard to their involvement in government’s Gold-for-Oil program, they will conduct a thorough analysis of the risks that the BoG is facing under the program and report the findings to the IMF Executive Board.

Also, the Bank of Ghana says it will gradually exit from the Gold For Oil program as the economy stabilizes.

According to the report, government says they introduced the G4O as a temporary scheme to secure adequate fuel supplies at favorable prices.

It says it will ensure that (i) contractual volumes and pricing structure for commodities’ export/import and intermediaries’ margins are transparent, (ii) the scheme is implemented in line with the applicable legal framework, and fiscal risks discussed with the MoF (iii) the Auditor General conducts regular performance audits of the scheme, (iv) Bank of Ghana gold purchases follow best international practice and central bank safeguards standards, and (v) the gold-for-oil framework is in line with IMF Article VIII.