Amid the heated debate over the purported losses of the Gold for Oil (G4O) Policy implemented by the former administration, the former Managing Director of the Bulk Oil Storage and Transportation Company (BOST) Mr Edwin Provencal is urging Ghanaians not to discredit the socio-economic impact of the policy.
The operations of the G4O policy have come under serious public scrutiny and criticism after the Bank of Ghana’s latest 2024 audited financial statement reported that the policy recorded a loss in 2024.
The report reveals that the Central Bank recorded a loss of GHC 1.82 billion on the G4O program in 2024. This, the bank adds, represents about a 500% increase over the loss of GHC 317 million also recorded in 2023.
But the former MD of BOST, Edwin Alfred Provencal, has clarified that the reported losses incurred under the initiative are not operational failures but largely foreign exchange (forex) losses resulting from currency depreciation.
Mr Provencal pointed out that the policy, launched in late 2022 to stabilize the economy by swapping gold for fuel, delivered major economic and social benefits despite the reported GHS 2.1 billion loss recorded over 2023 and 2024.
Forex Losses Explained
He broke down the forex loss, explaining that the initial seed capital of GHS 4.69 billion was valued at $397.4 million in 2023 when the exchange rate was GHS 11.8 to the dollar.
However, by 2024, due to the depreciation of the cedi to GHS 15.2/$, the same amount was worth only $308.5 million. This leads to an estimated forex loss of $88.9 million or 22.4%.
The loss simply reflects the part of the seed capital eroded as a result of currency movements, which any country dealing in forex can experience.
Irrespective of the loss, the former MD of BOST is calling on the public not to lose sight of the impact the policy had on the economy. He therefore went ahead to enumerate some of the benefits in a write-up to defend the policy.
A Stabilizing Force
Edwin Provencal argues that the economic indicators tell a compelling story. Inflation dropped significantly from 54.1% in December 2022 to 23.2% by the end of 2023.
Fuel prices at the pump fell from GHS 19.8 per liter in October 2022 to GHS 12.8 by October 2023, even as global oil prices remained relatively stable.
Social Relief and Energy Security
Beyond macroeconomic indicators, Provencal highlighted the initiative’s direct benefits to Ghanaians. He maintains that the program resulted in a relatively cheaper fuel for all. The Bank of Ghana capped BOST’s margin at 2% instead of the standard 7%, saving consumers over GHS 1.5 billion.
He adds that it also led to a steady flow of fuel meant fewer shortages and smoother economic activities.
For small-scale miners, the former MD says G4O boosted their market. The initiative created a reliable market for locally mined gold, boosting incomes for artisanal miners while spotlighting the need for sector reform.
Value Beyond the Numbers
Provencal insists that critics focusing solely on the forex losses miss the bigger picture. He notes that at the time, the economy was in crisis, and the policy delivered stability and protected citizens.
Its benefits to the economy and the people outweigh the nominal forex loss.
“The Gold-for-Oil initiative may have incurred financial losses, it contributed to macroeconomic stabilization, energy security, and social welfare in Ghana during a period of economic uncertainty whose value will far exceed the stated losses,” he maintained.
He called for a more nuanced public discourse that distinguishes between accounting losses and policy success.
