Ghana is planning to use her gold to buy imported oil products, the Vice President, Dr. Mahamudu Bawumia, has hinted.
According to the Vice President, the move is to address the foreign currency challenge associated with oil importation.
He posted this on his Facebook page yesterday, while the 2023 Budget and Economic Policy was being read in Parliament.
He explained in the post that the demand for foreign exchange by oil importers in the face of dwindling foreign exchange reserves resulted in the depreciation of the cedi.
He added that the demand also resulted in the increased cost of living with higher prices for fuel, transportation, and 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,” he wrote.
IMPORTANT ECONOMIC POLICY
The Head of the government’s Economic Management Team said the barter of sustainably mined gold for oil was one of the most important economic policy changes in Ghana since independence.
He expressed hope that if implemented as envisioned, it would fundamentally change Ghana’s balance of payments, and significantly reduced the persistent depreciation of the currency.
He explained further that the balance of payments would change, because the exchange rate would no longer directly enter the formula for the determination of fuel or utility prices, since all the domestic sellers of fuel would no longer need foreign exchange to import oil products.
The last part of his post reads: “The barter of gold for oil represents a major structural change. My thanks to the Ministers for Lands and Natural Resources, Energy, and Finance, Precious Minerals Marketing Company, the Ghana Chamber of Mines and the Governor of the Bank of Ghana for their supportive work on this new policy. We expect this new framework to be fully operational by the end of the first quarter of 2023.”
ADVOCACY
Industry gurus in the oil sector have advocated for attention to be given to oil importers with respect to forex.
At a stakeholder consultation meeting with President Akufo-Addo at Jubilee House, the representatives of the Forex Bureau Association of Ghana suggested to the government to channel more of the forex to the oil industry if it was settled that the sector consumed chunk a of the forex.
Another industry player, Duncan Amoah, Chief Executive Officer of the Chamber of Petroleum Consumers (COPEC), also argued that it was not right for importers of oil products to compete with importers of toothpicks and cow feet for forex.
