The 2028 flagbearer of the New Patriotic Party (NPP) and former Vice President, Dr Mahamudu Bawumia, has explained that the Gold-for-Oil policy and the Domestic Gold Purchase Programme were conceived as emergency measures to help Ghana navigate severe foreign exchange shortages and protect the economy during the crisis that followed the COVID-19 pandemic and the Russia-Ukraine war.
He said the initiatives were developed at a time when Ghana and several other emerging economies had lost access to international capital markets, creating significant pressure on the country’s balance of payments and limiting the foreign exchange available for essential economic activities.
Dr Bawumia made the disclosure when he engaged the Ghana National Association of Small-Scale Miners on Thursday, August 27, 2026 as part of consultations on practical reforms to address challenges confronting the sector.
“When I was vice president, Ghana faced a major economic crisis,” Dr Bawumia said, recalling the circumstances that informed the policies.
He said the COVID-19 pandemic and the Russia-Ukraine war had disrupted global markets and contributed to the loss of access to international capital markets by emerging economies, including Ghana.
According to Dr Bawumia, Ghana had previously relied significantly on international capital markets to raise foreign currency to support its economic activities.
“You know, before then, we would normally go to the capital markets, raise $3 billion and then go on in terms of our economic management,” he explained.
He said that source of financing was suddenly closed to Ghana and several other countries, resulting in a balance of payments crisis.
“But suddenly that gap was shut for quite a few countries. And for us it resulted in a balance of payments crisis,” he said.
Dr Bawumia said the crisis meant Ghana was facing severe constraints in accessing foreign exchange to undertake its normal economic activities and maintain stability in the foreign exchange market.
He said the situation was further complicated by Ghana’s engagement with the International Monetary Fund (IMF), which placed restrictions on the amount of foreign exchange the Bank of Ghana could use to intervene in the market.
“If you all recall, at this time also, we were inched in an IMF program and one of the restrictions for the IMF program that we engaged in was the amount of foreign exchange that the central bank could use to intervene to support the cedi,” he said.
According to him, the ceiling was set at a maximum of $80 million a month. “Maximum $80 million a month,” he said.
Dr Bawumia argued that the amount was inadequate to meet Ghana’s monthly foreign exchange demand, creating further pressure on the cedi.
“And you can imagine what the demand for foreign exchange for Ghana would be on a monthly basis, significantly more than $80 million a month,” he said.
He explained that with demand exceeding supply, pressure on the exchange rate was inevitable.
“And so in that particular framework that we were in, when demand exceeds supply, prices would go up, isn’t it?” he questioned.
He said the result was a sharp deterioration in the exchange rate, with the cedi depreciating almost daily.
According to Dr Bawumia, policymakers were therefore compelled to consider alternative ways of meeting Ghana’s foreign exchange needs without relying entirely on conventional interventions.
According to him, developments in Sri Lanka, where severe foreign exchange shortages had affected the country’s ability to pay for essential imports, including fuel, also heightened his concerns about what could happen if Ghana’s crisis persisted.
“In fact, at some point I was getting very concerned because I could see at the same time what was happening in Sri Lanka.
“In Sri Lanka, people were out on the streets, they were facing similar foreign exchange constraints and there was shortage of fuel because you couldn’t pay,” he added.
It was against this backdrop, Dr Bawumia said, that he began considering how Ghana could use its gold resources to meet some of its import requirements directly.
He explained that although Ghana could sell gold or cocoa for US dollars, restrictions on foreign exchange interventions meant those dollars could not simply be deployed without limits to support the cedi.
“And so why don’t we come up with the idea of gold for oil to start with, to exchange our gold for oil so that we get out of this foreign exchange construct,” he said.
He described the Gold-for-Oil programme as a response to the specific foreign exchange constraints confronting Ghana at the time.
“And this is the background of the gold for oil program, which essentially saved us from a bigger crisis,” he said.
According to him, without the arrangement, Ghana could have faced serious difficulties securing petroleum products because of the shortage of foreign exchange.
Dr Bawumia said the Gold-for-Oil initiative, however, required Ghana to have access to sufficient gold to make the barter arrangement work.
“So that was a measure that was introduced. Of course, we had to buy the gold, isn’t it?” he said.
