Revealing the policy in a post on his Facebook page on Thursday, Vice President Bawumia said the policy is expected to take effect by the end of the first quarter of 2023.
He said in a Facebook post that “The Use of Gold To Buy Imported Oil Products
“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, etc. 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. The barter of sustainably mined gold for oil is one of the most important economic policy changes in Ghana since its independence.
“If we implement it as envisioned, 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 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.”
Sharing his views on this, Dr John Kwakye said in a tweet that “This is mere window dressing and will not address the perennial depreciation of the cedi.
“The viable option is to restructure the economy and continually increase the foreign exchange cover for the currency issue.”
“I don’t get the rationale of this policy at all. To me, gold is as good as forex. So, whether we use gold or forex to purchase oil, we’ll be depleting our reserves and the pressure will be back on the cedi.”