The seeming stability of the cedi against the dollar is due to the government’s Gold for Oil (G4O) policy, according to Paul Eric Ofori, the Head of Research at the Chamber of Petroleum Consumers (COPEC).
Speaking on Wednesday, August 28, 2024, Ofori explained that without this policy, the cedi could have reached between 20 and 25 cedis to a dollar.
The G4O policy, introduced in 2022, allows Ghana to pay for imported oil using gold instead of foreign currency.
This strategy was aimed at stabilising fuel prices and reducing the strain on the country’s foreign exchange reserves.
“For the avoidance of doubt, I have said it here: yes, it’s done two things for Ghana—one, some form of stability to the cedi because I have said on this platform that if not for that policy, the cedi should be hovering around 20-25 cedis to a dollar,” Ofori stated.
He added that the policy has also reduced the cost of premiums associated with free on board (FOB) pricing, marking it as a significant benefit for the economy.
Vice President Dr Mahamudu Bawumia, believed to be the architect of the G4O policy, expressed his satisfaction with its impact during a media engagement on August 25, 2024.
However, he voiced regret over the delayed implementation of the policy.
“I wish, for example, we had started the gold purchase much earlier. If we had started it earlier during our first term, for example, the buffer in terms of gold would have been much bigger.
A few years ago, we had 8.7 tonnes of gold, and so far, they have bought about 72 tonnes or so.
It is something that I wish for when I sit back and look. I wish we had been able to buy a bit more and start Gold for Oil and reserve much earlier,” Bawumia revealed.