Ghana’s Gold For Oil Policy Begins January

The vice President of Ghana, Dr Mahamudu Bawumia has announced that plans to exchange gold for oil will begin in January 2023.

This was announced on his Facebook page on Thursday, December 22.

The policy was first disclosed to Ghanaians on November 24 in a social media post by the veep.

Then, he said the policy was under negotiations.

He explained the policy was meant to protect the country’s foreign exchange reserve which was fast dwindling causing a steep cedi depreciation and inflation.

“The demand for foreign exchange by oil importers in the face of dwindling foreign exchange reserves results in the depreciation of the cedi and increases in the cost of living with higher prices for fuel, transportation, utilities.

“To address this challenge, Government is negotiating a new policy regime where our gold (rather than our US dollar reserves) will be used to buy oil products.”

To him, this is a major structural change which will transform the country’s balance of payments and “significantly reduce the persistent depreciation of our currency with its associated increases in fuel, electricity, water, transport, and food prices.

“This is because the exchange rate (spot or forward) will no longer directly enter the formula for the determination of fuel or utility prices since all the domestic sellers of fuel will no longer need foreign exchange to import oil products”, he explained in post.

The policy was “misinterpreted” as an attempt by Ghana to move away from trading with the US dollars but was immediately debunked by the Vice President during the 2022 AGI Awards in Accra.

In his speech, he said that “this (Gold for Oil policy) has been misrepresented as Ghana being against the use of the US dollars in International transactions. This is not the case. We are not on any mission against the use of the dollars in international transactions, far from it.

“In fact, we want to accommodate all US dollars in our reserves. But we have a specific issue to deal with oil imports and the prices of fuel, food and transport and utilities that’s essentially what we are targeting.”

Nine days to the end of the year, Bawumia has disclosed the policy will take effect in January.

“I am happy to announce that the Government of Ghana has concluded the arrangements for the operationalization of the Gold for Oil policy. Consequently, the first oil products under the policy will be delivered next month (January 2023)”, he said in the 22 Decemeber Facebook post.

Source: opemsuo.com/Hajara Fuseini