Dr. Mahamudu Bawumia, the vice president of Ghana, has said that using gold instead of dollars to buy oil is not a step against using the US dollar for international trade.
He added that the decision was made as a result of the Ghana cedi’s ongoing depreciation.
Dr. Bawumia stated that Ghana currently needs a lot more dollars in its reserves, hence the choice was not to boycott the usage of foreign money, during the AGI Awards night in Accra.
He said: “To address this fundamental challenge that we all face of depreciation and its impact on fuel and utility prices and food and so on, the government has opted to implement a policy of using our gold to buy oil products.”
“If we implement it as we have envisioned, it will fundamentally change our balance of payment and significantly reduce the persistent deprecation of our currency,” he added.
“This 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,” the Vice President explained.
Dr. Bawumia had earlier revealed government is negotiating a new policy that seeks to ensure the country purchases imported oil products with gold rather than foreign exchange.
In a Facebook post on November 24, 2022, the Vice President said the policy is expected to take effect by the end of the first quarter of 2023 and form parts of efforts to address the persistent depreciation of the cedi.
He explained that once the policy is implemented, “it will fundamentally change our 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,” the Vice president said.
“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, 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. God bless our homeland Ghana,” Dr. Bawumia earlier wrote on Facebook.