The 2023 Auditor-General’s report has revealed significant issues with the implementation of the Gold for Oil (G4O) programme.
The report highlighted the absence of a formal agreement between the Bank of Ghana (BoG) and the Precious Minerals Marketing Company (PMMC), which was responsible for purchasing the gold.
The government introduced the G4O policy in 2022 to address Ghana’s declining foreign currency reserves and the increasing demand for dollars by oil importers.
However, the Auditor-General, Johnson Akuamoah Asiedu in a statement, noted that without a formal agreement, key terms of engagement, such as fees or commissions paid to PMMC, were not confirmed.
The Auditor-General stressed that transactions of this nature must be formalised to ensure clarity and mutual understanding between the involved parties.
“Without a formal agreement, both parties might lack the certainty of common understanding as to the terms which govern the business relationship,” he stated.
The BoG in its response explained that forex reserves came under pressure in 2022 due to a challenging macroeconomic environment caused by the COVID-19 pandemic, the Russia-Ukraine war, and pre-existing vulnerabilities.
Although a Memorandum of Understanding (MoU) was signed between the BoG and PMMC to establish operating procedures, a formal agreement had yet to be finalised.
The Auditor-General urged BoG management to ensure a formal agreement is conducted for gold purchase and sale transactions with PMMC
“A Memorandum of Understanding (MOU) was initiated between the Bank and PMMC to guide the operating procedures of the transaction. Due to the urgent need for forex during the period, it was crucial to maintain the gold purchase transactions even as both parties reviewed the MOU,” he said.
The report further indicated that: “We noted that there was no dedicated offshore bank account for the Gold for Oil (G4O) programme. The proceeds for the sale and disbursement under the programme were made through the Bank’s Citibank New York account number 1025131078017. The Bank’s operational activities are expected to be separated from that of a special programme of this nature. This is necessary for proper accounting purposes and segregation of activities.”
The BoG in its response explained that steps were being taken to open dedicated offshore G4O accounts to record G4O proceeds. The Bank’s Financial Market Department has received Management’s approval to open Offshore accounts in Dubai with First Abu Dhabi Bank and Citibank.
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