The Gold-for-Oil Program: Economic Impact and Outlook

By Edwin Nii Alfred PROVENCAL(PhD)

Ghana’s Gold-for-Oil (G4O) program was launched in late 2022 as an innovative barter arrangement to tackle a worsening economic crisis.

The government aimed to exchange domestically procured gold for imported petroleum products, reducing the need for U.S. dollars to buy fuel.

This policy was introduced against a backdrop of soaring inflation (over 50% by end-2022) and a rapidly depreciating Ghanaian cedi, driven by high import costs for fuel and other essentials.

By using gold (a major Ghanaian export) to pay for oil, authorities sought to stabilize fuel prices, ease pressure on foreign exchange reserves, strengthen the cedi, and ensure energy security.

The program officially took effect in January 2023 with the first oil deliveries paid for in gold, making Ghana an intriguing case of commodity barter in the modern era.

This report analyzes the G4O program’s impact on key economic areas – inflation, currency stability, energy security, trade balance, and foreign reserves – over the program’s lifespan (2022–2024), and provides a five-year forecast.

It also evaluates improvements for enhancing benefits, and examines potential consequences if the program is terminated, drawing parallels from similar oil-barter models in other countries.

Table 1. Key Economic Indicators Before and During Gold-for-Oil

Indicator	2022 (Pre-G4O Crisis)	2023 (G4O Implemented)	2024 (Latest Est.)	2025 – 2020 Outlook Projection
Inflation (year end)	54.1% (Dec 2022) multi-decade high	23.2% (Dec 2023) – sharp disinflation	23.0% (late 2024) – moderating	~11.5% in 2025, single digits by 2026 if trends hold
Cedi Exchange Rate	Severe Depreciation (Ghc/$ down ~50% in 2022)	Stabilized (minimal change in 2023)	Slight depreciation in H2 2024	Gradual Stabilization; mild depreciation if inflation gap closes
Fuel Pump Price (Petrol)	~Ghc 16.57/L (Nov 2022 peak)	~Ghc11.90/L (Jun 2023) – prices halved from peak	Varied (some increase late 2024)	Linked to global oil trends; expected to remain moderate if cedi stable
Oil Imports	~$4.8billion (est. annual bill); 32% of import value	~2billion of oil (30% of needs) paid via gold	Import share of oil down to 25.7% (due to lower volumes)	Import billl to rise with growth; local refining and energy diversification could reduce FX burden
Foreign Reserves	Rapid drawdown to ~$6 billion (end-2022) amid crisis	Stabilized at ~$6.9 billion (end-2023)	Stable ~$8.9 billion (end-2024)	Gradual rebuild to safer levels (>4months import cover) with IMF support & prudent FX management
Current Account Balance	~2.1% of GDP (2022 deficit)	1.3% of GDP (2023 surplus) – first surplus in 20 years	4.2% of GDP – record trade surplus surplus	Slight deficit (~0-2% of GDP) as imports recover depends on commodity prices and export diversification

Sources: Ghana Statistical Service, Bank of Ghana, World Bank, IMF, Fitch Solutions. Figures for 2024 are estimates; outlook figures are projections based on available forecasts.

Program Overview and Mechanism

Under the Gold-for-Oil program, the Bank of Ghana (BoG) buys gold from domestic producers (in local currency) and, via the state-run Precious Minerals Marketing Company (PMMC), uses these gold reserves to pay international suppliers for petroleum products.

The imported fuel is then handled by the Bulk Oil Storage and Transportation Company (BOST) and distributed to the market through Bulk Distribution Companies. This cycle allows Ghana to bypass the usual requirement of paying in U.S. dollars for oil imports. By late 2022, preparations were underway, and the first gold-paid oil consignment arrived in January 2023.

Throughout 2023, the program scaled up gradually. Initially, it covered only about 10% of Ghana’s monthly fuel consumption, rising to roughly 30% at its peak. In total, 2023-24 review reported 56 cargoes (1.84 million metric tons of fuel) were imported via G4O, accounting for ~30% of national requirements and valued at nearly $2 billion (paid in gold).

The remainder of fuel needs continued to be met by regular market transactions through private importers using foreign exchange. Figure 1 illustrates the G4O model, involving BoG, PMMC, BOST, and fuel distributors, in a cyclical trade process.

The policy rationale was straightforward: fuel imports constituted about a third of Ghana’s total import bill, exerting constant downward pressure on the cedi and draining foreign reserves.

By substituting gold for dollars in these transactions, authorities hoped to reduce forex demand, thereby slowing cedi depreciation, and to buffer domestic fuel prices from exchange rate volatility. In essence, Ghana leveraged its status as Africa’s largest gold producer to pay for one of its costliest import commodities (oil) in a barter-like arrangement reminiscent of 1970s countertrade practices.

Governance and Transparency: The implementation, however, drew scrutiny. In 2023, Ghana’s Auditor-General noted the absence of a formal agreement between BoG and PMMC in the G4O transactions – a “glaring oversight” that raised transparency concerns.

Small-scale gold miners were required to sell to PMMC for the program, a mandate that, while ensuring gold supply, risked encouraging smuggling due to miners seeking higher prices on the black market. Other critics of the program claimed it fueled illegal mining also known as Galamsey, polluting the river bodies.

The opaque nature of the deal became a political issue: the opposition questioned G4O’s accountability, pledging to audit it if elected. These concerns underscore that beyond economics, robust oversight and clear frameworks were needed to make such a barter scheme sustainable.

Impact on Inflation

Pre-G4O Surge: Ghana experienced a severe inflation spike in 2022, with consumer prices up 54% year-on-year by December 2022. This inflation crisis was fueled by a perfect storm: global commodity shocks (COVID-19 aftermath and the Russia-Ukraine conflict), a collapsing currency, and surging import costs for fuel and food.

As a net importer of refined petroleum, Ghana saw global oil price increases and cedi depreciation translate directly into higher transport and utility costs, feeding broad inflation. By November 2022, inflation had peaked around 50–54%, significantly eroding purchasing power.

Stabilization During G4O: The introduction of Gold-for-Oil coincided with a broader stabilization effort in 2023. Inflation declined dramatically to 23.2% by end-2023, marking a notable turnaround. Part of this disinflation was due to tighter monetary policy and a more stable exchange rate (the Bank of Ghana hiked interest rates, and the IMF Extended Credit Facility bolstered confidence).

The G4O program contributed by helping contain fuel price increases. By using gold to procure oil, Ghana reduced the pass-through of exchange rate shocks to fuel costs – fuel importers no longer needed to source as many dollars on the open market, relieving some pressure on pump prices.

Local fuel prices indeed stabilized and even fell in early 2023: Petrol, which was selling above GH?16 per liter in late 2022, dropped to about GH?12 per liter by mid-2023. Diesel saw an even sharper decline from GH?23 to GH?12 per liter over the same period. These reductions mirrored the decline in global oil prices from ~$96 to $74 per barrel between Nov 2022 and June 2023.

The Africa Centre for Energy Policy (ACEP) and the Chamber of Oil Marketing Companies (COMAC) argue that global trends (lower crude prices and freight rates) were the dominant factor in the fuel price drop, with G4O playing a marginal role. COMAC points out that fuel prices had begun falling before the first G4O oil cargo arrived and that G4O covered at most 30% of supply, limiting its influence.

However, G4O’s impact shouldn’t be dismissed entirely. Correlational analysis by Provencal & Abbey (2025) found that during the G4O period, the correlation between the cedi’s exchange rate and local pump prices weakened compared to pre-G4O – suggesting that exchange rate fluctuations translated less into price changes at the pump. In fact, while pre-G4O a weakening cedi was strongly associated with rising fuel prices (correlations of 0.76–0.87), during G4O this link was milder (0.57–0.66).

This indicates a buffering effect, consistent with the idea that paying in gold helped decouple fuel prices from some currency volatility. Additionally, an intriguing observation was that the correlation between global oil prices and the cedi reversed during the program – higher global oil prices corresponded with a strengthening cedi, opposite of the prior pattern. One interpretation is that by alleviating dollar demand when oil prices rose, G4O reduced the usual depreciation pressure, sometimes even supporting the currency.

Net effect on inflation: With fuel inflation contained, transport costs stabilized, and utility price pressures eased, contributing to the overall inflation decline. Government officials credited G4O as a factor in inflation’s fall from 54% to 23% , though it was one piece of a larger puzzle.

Other contributors were fiscal tightening and a freeze on utility tariff hikes, as well as base effects. In summary, G4O helped soften second-round inflation effects by moderating fuel price volatility, but it was not a silver bullet. Inflation remains elevated (hovering around 20–25% in late 2024) and responsive to currency movements. As such, while G4O provided some relief, restoring price stability required broad macroeconomic measures beyond this barter policy.

Impact on Currency Stability (Cedi)

One of the primary motivations of the Gold-for-Oil program was to halt the freefall of the Ghanaian cedi. In 2022, the cedi was one of the world’s worst-performing currencies, losing roughly 30–50% of its value against the US dollar during the year. From about GH?6 per $1 in January 2022, it plunged to around GH?13–14 per $1 by December 2022 amid dwindling reserves and panic demand for dollars. This sharp depreciation was a key driver of import-led inflation and undermined confidence in the economy.

Forex Demand Reduction: G4O directly targeted the exchange rate problem by reducing the demand for USD needed to import fuel. Normally, Ghana spends ~$400 million in forex monthly on oil imports (circa $4.8 billion annually, roughly equal to the country’s gross international reserves at the end of 2022).

By swapping gold for oil for a portion of these imports, the program saved a considerable amount of foreign currency. Roughly 30% of oil import value was transacted in gold under G4O, meaning perhaps $1.5–2 billion less demand for dollars over the year. This takes significant pressure off the cedi, given oil’s weight in the import bill. The former Finance Minister, Ken Ofori-Atta, noted that the gold-for-oil deal “greatly helped to stabilize the Ghana cedi” in 2023, citing it as a key factor in curbing the currency’s volatility.

Stabilization Evidence: Indeed, after G4O’s initiation, the cedi’s slide was arrested and partially reversed. From January 2023 through mid-2023, the cedi stabilized in a band of roughly GH?10–12 per $1, even appreciating at times when oil shipments under G4O arrived and market sentiment improved. Unlike 2022, where the cedi’s depreciation was steep and continuous, 2023 saw long stretches of stability. The Bank of Ghana reported that except for a blip in January 2023, the cedi remained relatively stable throughout the year, supported by improved forex liquidity (from the IMF and G4O).

Statistical analysis confirms this qualitative picture: correlations between forex rates and fuel prices weakened during G4O, implying the cedi was less hostage to oil-driven dollar demand. Moreover, as noted, the cedi sometimes strengthened when global oil prices rose, a notable break from the past and suggestive of G4O’s cushioning effect.

Academic research offers a nuanced perspective. Dzanku et al. (2024) found a positive but modest long-run relationship between oil import costs and the cedi’s exchange rate, with an elasticity of about 0.20. This means oil imports do contribute to cedi depreciation, but not overwhelmingly so – a 10% rise in oil import costs would, in the long run, weaken the cedi by about 2%.

Their conclusion: even in a best-case scenario, removing the need for dollars for oil (as G4O attempts) “will not be a panacea for the perennial exchange rate volatility”. Other factors (such as capital flows, investor confidence, and non-oil trade balances) play large roles. This is consistent with Ghana’s experience – while G4O helped stabilize the cedi in 2023, it was complemented by the IMF program, improved fiscal signals, and a general return of confidence.

By late 2023, the cedi had stabilized to the point of even modest year-on-year appreciation against the dollar (helped by a mid-2023 rally). Finance Ministry data indicated the cedi’s depreciation rate slowed dramatically relative to 2022.

However, some pressure resurfaced in late 2024 (a common election-year pattern and due to global dollar strength), with the cedi dipping slightly. Still, the magnitude of volatility was far lower than the prior crisis.

In summary, G4O contributed significantly to short-term currency stability, acting as a circuit-breaker during the cedi’s worst rout. By conserving scarce foreign exchange, it shored up market sentiment and reduced one of the biggest sources of dollar demand. Analysts like Joe Jackson, a financial expert, observed that the cedi’s depreciation “would have been worse if not for the Gold-for-Oil policy”, arguing that G4O provided an anchor for the currency during turbulent times.

That said, lasting currency stability will depend on broader economic health. G4O addressed symptoms of cedi weakness (high oil import demand) but not root causes like structural trade deficits and fiscal imbalances. The program bought Ghana time and breathing space; leveraging that respite to implement reforms is crucial for the cedi’s future stability.

Impact on Energy Security

Energy security – defined as the reliable and affordable supply of petroleum products – was a critical concern during the economic crisis. In 2022, there were genuine fears that Ghana, low on foreign exchange, might struggle to procure enough fuel for domestic needs, risking shortages. The Gold-for-Oil policy directly targeted this risk by opening an alternative channel to import fuel when conventional financing was strained.

Supply Stabilization: By securing a portion of fuel imports through gold trade, Ghana ensured that at least 20–30% of its fuel supply was insulated from foreign currency availability issues. This acted as a form of strategic reserve financing – essentially, using gold reserves to guarantee fuel inflows.

The Energy Ministry indicated that G4O was conceived in part to prevent a looming fuel shortage, which could have occurred in late 2022 or early 2023 when international suppliers grew hesitant due to Ghana’s forex liquidity problems.

In practice, once G4O shipments commenced, Ghana was able to maintain steady import volumes. There were no major nationwide fuel shortages in 2023, and queues at petrol stations (a visible sign of scarcity) were avoided, suggesting that the program succeeded in bolstering fuel security in the short-term.

Fuel price stabilization, already discussed, also ties into energy security: affordable fuel ensures economic stability and social calm. G4O contributed to more predictable pump prices (with smaller and less frequent hikes), which helped both consumers and businesses plan better. Notably, the spread between gasoline and diesel prices narrowed and became less volatile during the program, indicating a balanced supply of both fuels.

Limitations: Despite these gains, G4O was not a complete solution to Ghana’s energy supply needs. It covered only about one-third of fuel consumption at peak, meaning the majority of imports still relied on traditional dollar payments. When global oil prices rose or the cedi slipped, Ghana still felt the impact on that portion of imports.

For example, in the second half of 2023, oil prices ticked up and the cedi saw mild depreciation; as a result, domestic fuel prices began creeping up again, contributing to a slight rise in inflation by year-end. G4O could only partially mitigate such pressures given its scale.

Additionally, operational hiccups emerged: by late 2024, reports from industry stakeholders suggested sporadic fuel supply tightness, possibly due to delays or complications in the gold procurement or oil delivery process. Dr. Riverson Oppong, CEO of the Association of Oil Marketing Companies argued that G4O “failed to stabilize energy prices and even contributed to fuel shortages towards the end of 2024”.

While the government did not fully concede this point, it acknowledged the need to review the policy to prevent any supply disruptions. The new Energy Minister in early 2025 noted that the program, as inherited, had flaws contributing to inefficiencies and would be reformed to ensure more robust supply arrangements.

Comparative context: Ghana’s experiment can be compared to Nigeria’s prior fuel swap system, where crude oil was exchanged for refined products under contracts (the DSDP program). That system similarly aimed at ensuring domestic fuel supply despite limited refinery output.

It succeeded for a time in securing gasoline for Nigeria, but eventually faced problems (opacity, debts, and supply gaps) and had to be overhauled. Ghana’s G4O, being more transparent in the sense of using a state commodity (gold) to directly purchase fuel, arguably kept the supply chain simpler. Even so, the need for a solid framework and backup plans (like maintaining sufficient fuel stocks or credit lines) became evident.

In conclusion, Gold-for-Oil enhanced Ghana’s energy security during a critical period by leveraging gold reserves to keep fuel flowing. It acted as a buffer against external shocks and domestic forex shortages, thereby avoiding acute crises like fuel rationing.

However, its partial coverage and implementation gaps mean it was necessary but not sufficient. Long-term energy security will require further measures – including revamping the Tema Oil Refinery (TOR) and ensuring that privately-owned Sentuo Refinery’s sustains operation to reduce import dependence, diversifying fuel supply sources, and improving payment mechanisms – alongside or beyond the G4O framework

Impact on Trade Balance and Current Account

Ghana’s trade balance (exports minus imports) and current account position saw notable changes over the G4O period, though disentangling the program’s effect from other factors requires careful analysis. Historically, Ghana often runs a current account deficit, financed by capital inflows. In 2022, the current account deficit was about 2.1% of GDP, reflecting high import bills (especially oil) against export earnings. By 2023, however, Ghana achieved an unexpected surplus of GH?5.3 billion and 2024 saw a significant trade surplus of GH?44.7 billion.

Improvement in 2023: According to Fitch Solutions, Ghana recorded a current account surplus of approximately 1.3% of GDP in 2023 – its first surplus in two decades. This swing was driven primarily by a large trade surplus.

Two dynamics were at play: exports held up or grew modestly (thanks to high gold prices and increased oil export volume from existing fields), while imports contracted sharply due to weak domestic demand and currency constraints. Merchandise imports fell over 13% year-on-year in the first half of 2023 as the economy adjusted to austerity and a lack of forex.

Notably, lower global oil prices in early 2023 and the substitution effect of G4O reduced Ghana’s oil import bill, which was a key factor in the import compression. Ghana Statistical Service trade data for 2023 show that outlays on mineral fuels dropped significantly from the prior year, and the share of mineral fuels in total imports declined from 32.1% to 25.7% by 2024. Part of this drop is attributable to G4O’s impact – paying with gold essentially kept those transactions off the forex books, if not the trade books.

It’s important to clarify how G4O transactions reflect in trade statistics. The barter nature means Ghana is effectively exporting gold and importing oil. If recorded transparently, the value of gold shipped out under G4O would count as an export (a reduction in gold inventories but an export revenue in balance of payments terms), and the oil received counts as an import.

In net terms, it could be a wash – gold worth $2bn out, oil worth $2bn in – thus neutral for the trade balance, aside from pricing differentials. However, if the gold used was part of what would have been exported anyway, then Ghana’s official gold exports will appear lower by the amount diverted to G4O.

In 2023, Ghana’s gold export earnings actually surged, suggesting that overall production and sales were high enough that even after siphoning some gold for oil, export values rose (helped by high global gold prices around $1,800–$1,900/oz).

Thus, Ghana may have essentially drawn from its increased gold output to fund oil imports internally. The net effect on the trade balance of this swap can be seen conceptually as reducing imports (since oil imports paid in foreign exchange dropped) but also reducing some exports (gold not sold abroad for cash).

Economic theory indicates the two effects largely offset: one analyst noted that while using gold for oil cuts the import bill (improving net exports), it also means those gold ounces aren’t earning forex from exports (worsening net exports), likely leaving the balance of trade unchanged in pure flow terms.

However, there is a balance of payments advantage in that the financing of the trade is different – no immediate forex outflow for that portion of imports, which helps the currency and reserves as discussed.

In practice, Ghana’s trade surplus widened in 2023 and 2024. The Bank of Ghana reported a record trade surplus of about $5 billion in 2024, driven largely by a 50% surge in gold export value and robust oil exports.

Even as imports recovered somewhat in 2024, they remained below pre-crisis levels in real terms, and oil imports were partly constrained by the G4O mechanism and still relatively high domestic fuel prices curbing demand. The improved trade balance contributed directly to reserve accumulation and eased external financing needs.

Role of G4O: We can infer that G4O helped the trade/current account balance indirectly by preventing an even larger import bill in 2023. By keeping $2bn of oil imports off the FX-demand ledger, the program forced an internal balancing (using domestic gold assets) rather than external borrowing or reserve drawdowns. In essence, Ghana “paid itself” with gold for a chunk of imports, which aligned with the balance of payments constraint it faced.

Had Ghana needed an extra $2bn in 2023 to import that fuel, the current account might have tipped back into deficit (or reserves would have been $2bn lower). Thus, while on paper the trade balance includes the swap, in terms of impact, G4O was a tool that facilitated import compression without causing fuel shortages. This is supported by econometric evidence that oil imports are a driver of Ghana’s current account pressures – reducing them, even via barter, eased the external gap.

Looking ahead: Ghana’s current account outlook depends on how imports rebound, and exports perform. Fitch projects that as domestic demand recovers (post-crisis), imports will rise, and the current account could slip back into a slight deficit (~0.2% of GDP in 2024). If G4O (or a successor policy) continues, it may still cushion the oil import component.

However, a growing economy will need more imported inputs (capital goods, intermediate goods), so sustaining trade surpluses will be challenging without export expansion. The trade balance in coming years is likely to hover around balance or small deficits, assuming oil and gold prices stabilize.

Notably, new oil production expected by 2025–2026 (from Ghana’s offshore fields) could boost exports, and if global gold prices remain strong or production increases, export revenues will stay robust. The key risk is if commodity prices fall or if Ghana’s import demand surges (for example, through renewed consumer spending or capital projects) – then the trade balance could worsen again

In summary, the Gold-for-Oil program modestly improved Ghana’s trade balance dynamic by curbing the need for import dollars, complementing other adjustments. Ghana achieved a rare current account surplus during the program’s tenure, highlighting how reducing import dependence (even via barter) can tilt external accounts favorably in the short run.

But maintaining external balance long-term will require structural improvements – diversifying exports beyond gold/oil/cocoa and boosting competitiveness – so that the country is less vulnerable to import-driven deficits. G4O tackled one symptom of imbalance; the underlying condition (narrow export base versus high import needs) remains to be fully addressed.

Impact on Foreign Reserves

Ghana’s foreign exchange reserves were under severe strain prior to G4O, and one of the program’s explicit goals was to preserve and rebuild these reserves. International reserves are critical for a country’s ability to manage its currency and pay for imports, and they also underpin investor confidence.

Crisis and Recovery: By late 2022, Ghana’s gross international reserves had dwindled sharply – from about $9.7 billion at end-2021 to roughly $6 billion by end-2022 (covering barely 2.7 months of imports). This drawdown was due to continual intervention to support the cedi, debt servicing, and financing of imports during the crisis.

The slide in reserves left Ghana dangerously close to illiquidity in terms of paying for critical imports like fuel and medicine. In fact, the low reserve level and loss of market access prompted Ghana to seek IMF support and consider unconventional measures like G4O.

During 2023, the reserve situation stabilized and even improved slightly. By mid-2024, reserves had risen to about $6.9 billion from $5.9 billion a year earlier, ending 2024 with $8.9 billion.

Several factors contributed to this: the disbursement of IMF funds (Ghana received about $600 million in mid-2023 under the Extended Credit Facility), the current account swinging to surplus (meaning the country was earning more forex than it was spending, net), and of course, reduced intervention as the cedi stabilized.

Gold-for-Oil played a role by conserving foreign exchange that would have otherwise been spent on oil. Every barrel of gasoline or diesel bought with gold was one less claim on Ghana’s dollar reserves.

As a result, the pace of reserve depletion slowed markedly once G4O began. BoG officials indicated that forex savings from the gold payments helped shore up reserves amid otherwise tight conditions. Additionally, the reserve situation was boosted by the central bank’s Gold for Reserves program that run alongside the G40.

It’s important to note that when BoG purchases gold from miners (paying cedis) and then swaps that gold for oil, it is effectively converting part of its local currency liquidity into an international commodity (gold) and then into an essential import (oil). If BoG had instead bought gold and kept it, that would add to official reserves in the form of gold assets.

In G4O, BoG’s gold holding doesn’t increase – the gold is immediately used – but what does increase is the effective import capacity of the existing reserves, since some oil is obtained without using dollars. In a sense, Ghana “spent” its gold reserves rather than its dollar reserves for that portion of imports. Viewed this way, G4O was like drawing on an alternative reserve asset (gold) to protect the core foreign currency reserve.

By the end of 2023, Ghana’s reserves in months of import cover improved slightly and were bolstered further by reduced external debt servicing (due to the default/restructuring process) and capital controls that dampened outflows. The World Bank noted that reserves increased from $5.9 billion to $6.9 billion alongside the current account surplus in 2023 – a positive outcome that can partly be attributed to policies like G4O and import compression.

Quality of reserves and gold’s role: It’s worth highlighting that Ghana was also adding to its gold reserves as part of a separate initiative. The BoG’s Domestic Gold Purchase Programme (DGPP) aimed to build a monetary gold reserve buffer, and some of that gold was what enabled G4O.

As of mid-2023, BoG had accumulated several tonnes of gold. Even after the G4O shipments, Ghana’s official gold reserves were reported to have grown (indicating BoG bought more gold than it traded away). In theory, gold in reserves could act as collateral for forex or be swapped for currency in emergencies. G4O effectively operationalized that concept by directly swapping gold for a needed import.

Critics caution that unless carefully managed, such a program could have indirect effects on money supply. If BoG printed cedis to buy gold from miners, that injects liquidity which could be inflationary. Ideally, BoG would sterilize these operations (e.g. by issuing securities to mop up the extra cedis) to avoid undermining its own inflation fight.

The Tesah Capital analysis flagged this concern: using central bank money to buy gold could expand the money supply and initially weaken the currency, although when that gold is used in lieu of dollars for imports, it offsets some depreciation pressure. There is a delicate balance in how G4O affects net reserves: if not managed well, one could simply shift the pressure from FX reserves to domestic inflation.

Empirically, Ghana’s inflation did come down and the cedi held, suggesting BoG managed to contain those side effects. The net outcome is that foreign reserves were kept at a higher level than they otherwise would have been. By early 2025, Ghana’s gross reserves were roughly stable, and confidence in the country’s ability to pay for imports had improved compared to the dire situation in late 2022.

Moving forward, foreign reserve accumulation remains a priority. The government has indicated that any successor to G4O (such as a new Gold Board strategy) will be designed in part to align with IMF requirements and boost reserves transparently.

For instance, if Ghana establishes a Gold Board that centralizes gold purchases, it could both support a gold-for-oil mechanism and add to official reserve holdings (if some gold is retained). Over the next 5 years, with disciplined fiscal policy and potentially continued use of gold in reserves, Ghana aims to rebuild its import cover to more prudent levels (e.g., 4 months of cover, from around 3 months previously).

In conclusion, the Gold-for-Oil program helped Ghana avoid a depletion of foreign reserves during a critical period, acting as an alternative source of import financing. Reserves not only stabilized but modestly increased in the program’s duration, reflecting the easing of external pressure.

This was achieved alongside improving the current account and securing external aid. While G4O is not solely responsible for the reserve turnaround, it was a meaningful component of the strategy to “save the reserves” and avert a balance-of-payments crisis. The key will be to lock in these gains through sustained export earnings and cautious import management as the economy recovers.

Five-Year Economic Forecast (2025–2030)

Looking ahead, Ghana’s economic trajectory will depend on policy decisions around programs like Gold-for-Oil and broader structural reforms. The following forecast assumes Ghana continues on a path of fiscal consolidation under the IMF program, with either a continued refined G4O scheme or alternative measures in place to manage oil imports.

• Inflation: Ghana is expected to gradually converge towards lower inflation in the next five years. The IMF projects consumer price inflation to average about 11.5% in 2025, down from ~45% in 2022. This trend assumes tight monetary policy and relative exchange rate stability. By 2026–2027, inflation could return to single-digit territory (around 8–9%), approaching the central bank’s target band. Key drivers will be fiscal discipline (avoiding monetization of deficits), anchored inflation expectations, and stable food prices. If the Gold-for-Oil program or its successor continues, it could further temper inflation by smoothing fuel price volatility. Conversely, if the program ends and global oil prices spike or the cedi weakens, inflation could face upward risks. On balance, most forecasts (e.g., Statista/IMF outlook) see Ghana’s inflation cooling to ~8% by 2028, assuming no major commodity shocks.
• Currency (Exchange Rate): The Ghanaian cedi is likely to remain more stable in the coming years compared to the wild swings of 2022. With the current IMF-supported reforms, the cedi’s value has a stronger foundation – external imbalances are smaller and reserves slightly higher. We anticipate a moderate depreciation trend – perhaps on the order of 5–10% per year vs. the US dollar – rather than a steep decline, reflecting residual inflation differentials. Much will depend on global conditions: if the US dollar broadly weakens, the cedi could even appreciate or hold steady. The continuation of some form of gold-for-oil or enhanced gold reserve policy might bolster confidence. As one analyst put it, “if implemented properly [G4O] will deliver stability in the pricing of the cedi” . Over five years, structural improvements (such as increased oil exports and mining output) could strengthen the cedi’s fundamentals, potentially bringing it closer to equilibrium. By 2030, the hope is the cedi finds a stable range supported by diversified export inflows (including non-traditional exports and AfCFTA trade) rather than needing heavy intervention.
• Energy Security: Ghana’s energy outlook may improve as well. In the next 2–3 years, new oil and gas developments (like the Pecan field and greater Jubilee output) are slated to come online, which will raise domestic crude production. While Ghana lacks large-scale refining currently, there are plans to rehabilitate the Tema Oil Refinery and potentially attract investment in new refining capacity or JV arrangements. Within five years, if Tema refinery is operational, Ghana could refine a portion of its own crude, reducing reliance on imported finished products – this would significantly enhance energy security. Additionally, the government has floated plans to leverage gold and other mineral revenues to invest in strategic fuel reserves and storage. We may see Ghana maintaining a buffer stock of petroleum that can be released to stabilize supply during shocks. Overall, the risk of fuel shortages should recede as forex availability improves and supply chains are diversified. However, Ghana will still be exposed to global oil price movements. Energy policy may tilt toward renewables and gas utilization to reduce oil import dependence. By 2030, if current trends hold, Ghana could meet more of its energy needs domestically (through a combination of modest refining, natural gas for power, and even some electric mobility gains), thereby strengthening energy security compared to the precarious 2022 situation.
• Trade Balance: The trade and current account balance are projected to be manageable but could oscillate. 2023’s surplus is not expected to persist every year; rather, Ghana might run small current account deficits (perhaps 1–3% of GDP) from 2024 onward, which is more typical for a developing economy investing in growth. Fitch Solutions indeed projects a mild current account deficit re-emerging as imports pick up. Crucially, these deficits should be far smaller than the unsustainable gaps of the past, and potentially financed more by stable sources (FDI, project loans) than short-term debt. Over five years, if Ghana’s export capacity expands (via mining, oil, agriculture, and nascent manufacturing), the trade balance could even remain near equilibrium. Gold output is poised to increase with new mines coming online and government efforts to curb smuggling, meaning official gold export volumes may rise. Oil exports will climb if production targets are met. Cocoa (still a key export) has upside if productivity programs succeed. On the import side, one expects a rebound in consumer and capital goods imports as the economy recovers, but also possibly a substitution of some imports if domestic industries (e.g., petrochemicals, food processing) grow under the government’s industrialization plans. In summary, the next five years likely see a modest current account deficit, on average, with the possibility of near balance if commodity prices are favorable. Ghana’s external position will also benefit if it continues to restrain unnecessary imports – a focus area mentioned by policy analysts is to “reduce unnecessary importations and boost exports” to sustain external balance.
• Foreign Reserves: With expected inflows from the IMF (the ECF program runs through 2026) and potential Eurobond market re-entry in a few years, Ghana’s foreign reserves should gradually build up. We project reserves to reach perhaps ~12 billion by 2028, from about $8–9 billion currently, assuming successful debt restructuring restores some market confidence and exports continue earning forex. This would raise import cover to a safer ~4 months. The composition of reserves might also include a higher share of gold if Ghana institutionalizes gold purchases (via the proposed Gold Board) – effectively creating a buffer stock of gold as part of reserves. This can be useful as a hedge; gold typically retains value when currencies don’t. By 2030, Ghana could have a more robust external buffer, though this hinges on running prudent policies. One risk is if capital outflows resume (for example, if global conditions tighten or if Ghana lifts certain FX controls prematurely) – that could drain reserves again. But assuming a stable environment, steady current account management and external support mean reserves will likely be higher in five years than they are now, bolstering the country’s financial resilience.

These forecasts, of course, carry uncertainties. Key risk factors include commodity price volatility (a spike in oil or drop in gold/cocoa prices would hurt Ghana’s terms of trade), climate impacts on agriculture (droughts can affect cocoa output, as noted by the World Bank), and domestic policy slippage (especially in election cycles).

Notably, 2024 is an election year and 2025 will test the new administration’s commitment to reforms. Should there be populist spending or reversal of hard-won gains, the outlook could weaken (higher inflation, pressure on the cedi, etc.). On the upside, effective reforms and perhaps positive outcomes from the African Continental Free Trade Agreement (AfCFTA) could open new export avenues, improving the 5-year outlook.

In summary, Ghana’s medium-term outlook is cautiously optimistic: inflation is set to moderate, the currency to stabilize, and growth to resume around 4–5% from 2025 onwards. The role of Gold-for-Oil or any successor mechanism in this period will be to continue guarding against external shocks, especially in the oil import segment.

If the program (in improved form) persists, it will complement macroeconomic policies in keeping inflation and the exchange rate in check. If it is phased out, the hope is that by then Ghana’s fundamentals will be strong enough to handle oil imports through normal channels without destabilizing effects.

Potential Economic Consequences if the Program is Terminated

Given the political transition in early 2025, there is a real scenario where the Gold-for-Oil program is discontinued and replaced with a different policy. It’s crucial to assess what ending G4O could mean for Ghana’s economy. If the program is terminated without adequate safeguards or alternatives, the following consequences are likely:

• Renewed Pressure on the Cedi: Stopping G4O would mean oil importers must revert to sourcing 100% of their foreign exchange from the market or central bank to buy fuel. This could increase monthly demand for dollars by hundreds of millions, all else equal. Such a surge in FX demand would put depreciation pressure back on the cedi. The currency’s relative calm in 2023 was partly due to G4O’s relief; removing that relief could replicate the conditions of 2022 when high import demand drove the cedi down. Unless Ghana’s dollar inflows have markedly improved (through exports or aid), the Bank of Ghana might be forced to dip into reserves or tighten currency supply, which could in turn affect interest rates and liquidity. In sum, an abrupt end to G4O risks a faster depreciation of the cedi and associated inflation pass through.
• Strain on Foreign Reserves: Ghana would need to use its foreign reserves to pay for the additional oil imports or supply more FX to the market. With reserves still relatively low (around $7 billion), an extra $2 billion outflow (the annual value of the G4O swap) can significantly erode reserves over a year. This could undermine Ghana’s external stability and confidence – precisely what G4O was trying to protect. Lower reserves would reduce Ghana’s import cover and could alarm investors or the IMF if not managed. Ghana might then have to seek other arrangements, such as short-term commodity-backed loans or swap lines, to bolster reserves – potentially at higher cost or on less favorable terms.
• Fuel Prices and Inflation: In the absence of G4O, fuel prices would be fully exposed to the exchange rate and global oil price fluctuations. If the cedi depreciates more quickly without G4O, import costs rise and Oil Marketing Companies will pass that on at the pump. We could see more volatile and upward-trending fuel prices, which directly feeds into inflation (transport costs, cost of goods). For instance, Nigeria’s experience is instructive: when it ended a similar arrangement (crude-for-fuel swap) and simultaneously removed fuel subsidies in 2023, petrol prices tripled overnight, causing a jump in inflation and public outcry. Ghana doesn’t have fuel subsidies currently, so any market increase would directly hit consumers. A less dramatic but analogous effect could happen – fuel that was, say, GH?13 per liter could climb higher if the exchange rate slips. The Ghanaian Times quoted industry experts warning that G4O’s termination, if not timed well, could “serve as a shock to fuel supply and pricing”, given that it had been a crutch for the past two years.
• Risk of Fuel Supply Disruptions: If Ghana’s forex situation remains fragile and G4O is ended, there’s a chance that fuel imports could face financing issues, especially if oil prices rise or suppliers demand upfront hard currency. Under G4O, suppliers had some assurance of value (gold) that might not be subject to Ghana’s credit risk. Without it, they may require letters of credit confirmed by international banks, which could be challenging if Ghana’s credit rating is poor. In worst-case scenarios (which Ghana will strive to avoid), this can lead to sporadic shortages or the need for rationing fuel until dollars are found. Such a situation occurred in countries like Pakistan at times – when FX is scarce, fuel importers simply can’t open LCs, leading to shortages. Ghana experienced mild episodes in the past when BDCs struggled with forex. Thus, a controlled transition is essential to prevent any shock to the physical availability of fuel.
• Fiscal and Debt Implications: While G4O itself was not on the government budget explicitly, ending it might have some fiscal side-effects. For example, if higher fuel prices result, there may be public pressure to mitigate those (through subsidies or tax cuts on fuel). That could strain the budget, which Ghana can ill afford in a consolidation phase. Alternatively, the government might need to allocate more foreign currency from its coffers to BOST or others to ensure fuel supply, effectively taking on an quasi-fiscal role that BoG’s gold was playing. Moreover, Ghana might consider substituting G4O with an oil-import finance facility from, say, an international bank or an arrangement with an oil-producing country. If such a deal involves credit (like an oil import on deferred payment), it increases external debt. Some countries, when ending barter schemes, turned to dollar-denominated borrowing to pay for imports, shifting the burden to debt. Ghana’s debt is already high, so this is a concern.
• Mitigation Strategies: If the government decides to terminate G4O, doing so gradually and with safeguards can mitigate adverse impacts. For instance, they might wind down the proportion of oil imports paid in gold over several months, while BoG simultaneously bolsters the forex market with modest interventions to meet the returning demand. Communication will be key: authorities should reassure markets that reserves are sufficient and that alternative arrangements are in place to prevent disruption. The Energy Minister, John Jinapor, emphasized that the program “cannot be truncated until there is a workable solution” in place, signaling an understanding that a soft landing is required. That could involve, for example, securing agreements with oil traders for slightly extended payment terms (30-60 days) paid in dollars, giving BoG time to accumulate the needed forex from exports. Additionally, since Ghana has been increasing gold reserves, BoG could, in an emergency, sell a small portion of its gold on the international market for dollars to cover oil needs – effectively achieving the same outcome as G4O but through two separate market transactions (gold sale and oil purchase). This would be less ideal than the barter (because of market frictions and potentially lower gold prices at sale), but it’s a fallback option.

In essence, terminating Gold-for-Oil without a replacement would remove a supportive prop from Ghana’s economy. It would likely lead to a period of adjustment where the cedi might weaken and fuel costs rise, testing the resilience of Ghana’s recent stabilization. However, if done in coordination with broader improvements – higher exports, restored investor confidence, an IMF backstop – the impact can be contained to a temporary uptick in inflation and a manageable draw on reserves.

Conclusion

Ghana’s Gold-for-Oil program has been a bold and innovative policy experiment, one that attracted global attention for its attempt to leverage a traditional asset (gold) to solve modern economic problems.

Over the two years of its operation, G4O has had a tangible impact on the Ghanaian economy: it helped stabilize fuel supply and prices during a period of crisis, contributed to easing inflation from historical highs, and provided support to the cedi and foreign reserves when they were under extreme pressure.

The data show that during the G4O period, inflation dropped sharply (from 54% to the 20s), the exchange rate steadied, and the current account even moved into surplus – outcomes that aligned with the program’s objectives, though clearly aided by other policy interventions and external factors.

Crucially, G4O’s achievements came with limitations. It was no cure-all for Ghana’s economic woes; structural issues like debt overhang, fiscal deficits, and a narrow export base still needed resolution. Academic and policy analyses caution that the program’s effect, while positive, was not large enough to single-handedly fix the cedi’s volatility or high inflation in the long run.

Indeed, Ghana’s economy stabilized through a combination of measures – the IMF program, debt restructuring, fiscal cuts, and G4O – and it is the holistic improvement that has put Ghana on a better footing entering 2025.

Looking forward, the forecast for Ghana’s economy is guardedly optimistic. If reforms stay on track, the next five years should bring more stability: inflation potentially returning to single digits, the currency experiencing milder fluctuations, and growth recovering to around 5%.

The role of Gold-for-Oil in this future is uncertain – it may be revamped and continued in some form or phased out for more conventional policies. In either case, the fundamental drivers of economic health will be sound macro management and export-led growth. A refined G4O could complement these by providing a buffer against oil price and currency shocks, whereas ending G4O places greater onus on those fundamentals to hold.

To maximize the benefits seen so far, Ghana can implement improvements to G4O’s framework – ensuring transparency, accountability, and integration with broader economic strategy.

By doing so, any continuation of the program would address the criticisms (like opacity and potential financial slippage) and bolster confidence that Ghana is using its resources wisely. The call for a comprehensive legal structure and stakeholder engagement is particularly pertinent, as it would institutionalize the gains and reduce risks of corruption or mismanagement.

In the event the program is discontinued, Ghana will need to manage the transition carefully. The analysis of similar barter schemes elsewhere shows that unwinding them can expose hidden costs or imbalances suddenly – a reminder that there is ultimately no free lunch in economics.

Ghana would have to ensure its foreign exchange and energy planning are robust enough to absorb the change. Encouragingly, the authorities have recognized this, indicating that any end to G4O will be accompanied by alternative measures and not leave a vacuum.

From a broader perspective, Ghana’s Gold-for-Oil experience offers valuable lessons. It demonstrates that developing countries can employ creative mechanisms to navigate foreign exchange crises, especially when they have valuable commodities at hand. It also underscores the importance of good governance in such schemes – absent which, benefits can be diluted or lost.

Finally, it reaffirms a point often made in the literature: short-term barter solutions cannot substitute for long-term economic reforms. Ghana appears to be internalizing this lesson – treating G4O as one tool in a larger toolkit, while working on the fundamentals (fiscal balance, industrialization, export diversification) that ultimately determine prosperity.

In conclusion, the Gold-for-Oil program has been impactful in stabilizing Ghana’s economy in a turbulent period, affecting inflation, exchange rate dynamics, energy security, trade flows, and reserves in mostly positive ways. With prudent enhancements, it could continue to contribute to economic resilience. Without it, Ghana must lean more on orthodox strategies, which, if the current reform momentum continues, can also sustain stability.

The coming years will reveal how Ghana balances these approaches. What is clear is that the judicious management of natural resources – be it gold or oil – remains at the heart of Ghana’s quest for economic stability and growth, and in that respect, the Gold-for-Oil program has been a bold step in rethinking resource management for the national interest.

References:

• Provencal, E.A.N.O., & Abbey, E. (2025). The Gold for Oil program: A data exploratory analysis. Business & Financial Times. – Analyzes G4O’s impact on fuel prices, exchange rate correlations, and outlines program operations.
• Dzanku, F.M., et al. (2024). Potential Illicit Financial Flow Risks in Ghana’s Gold-for-Oil Transaction. In International Development Policy (Issue 17). – Econometric and governance analysis of G4O, finding a modest impact on currency depreciation (elasticity ~0.2) and highlighting transparency/legal issues.
• Tesah Capital Research (Nsafoah, D. & Agbloyor, E., 2023). The Economics of the Gold for Oil Barter Policy. – Provides a skeptical view of G4O’s ability to stabilize the cedi and fuel prices, warning of market distortions and inflationary effects if not managed.
• Chamber of Oil Marketing Companies (2025). COMAC Report (via CitiNewsroom). – Argues global factors drove fuel price declines, with G4O’s impact being marginal due to its limited 30% coverage.
• Bank of Ghana (2024). Monetary Policy Report. – Noted inflation fell to 23% by Dec 2023 and exchange rate stability improved, amid policy tightening and initiatives like G4O; reserves rose over 2023.
• World Bank (Oct 2024). Ghana Economic Update. – Details Ghana’s recent macroeconomic trends (inflation, growth, reserves) and gives an outlook through 2026, highlighting the need for continued reforms.
• Fitch Solutions (Aug 2023). Ghana Will Record Its First Current Account Surplus in 20 Years. – Analyzes factors behind Ghana’s 2023 external surplus (import compression, gold/oil exports) and predicts a return to small deficits as imports normalize.
• Reuters (June 2023). Nigeria’s NNPC winding down crude oil swap contracts. – Reports on Nigeria ending its oil-for-fuel barter (DSDP) as part of reforms, noting resultant fuel price surge; offers a parallel for potential outcomes if Ghana ends G4O without cushioning.
• MyJoyOnline (Sept 2024). Analysis: Ghana’s Gold-for-Oil Gamble. – Provides context on G4O’s rationale and challenges, including implementation flaws (no formal framework initially) and political debates.
• Ghana Ministry of Energy / MyJoyOnline (Feb 2025). Statements by Energy Minister on G4O. – Indicates plans to discontinue and replace G4O with a more transparent system (Gold Board), acknowledging current flaws and need for an interim arrangement to avoid disruption.

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