The Government of Ghana is currently preparing a new policy, namely purchasing oil in gold, not in US dollars. This was announced by Vice President Mahamudu Bawumia via Facebook.
This policy aimed to overcome scarce foreign exchange reserves which resulted in a weakening of the cedi and an increase in the cost of living. If according to plan, this policy will be implemented in the first quarter of 2023.
“It will fundamentally change our balance of payments and significantly reduce the continued depreciation of our currency,” he said. ReutersFriday (11/25/2022).
The use of gold is believed to prevent the weakening of the exchange rate which impacts fuel prices. This is because foreign currency is not needed to import petroleum products.
“Bartering gold for oil is a major structural change,” he added.
Ghana produces oil raw. However, the country has been dependent on imports of petroleum products since its only refinery closed after a boom in 2017.
Bawumia’s statement came as Finance Minister Ken Ofori-Atta announced measures to cut spending and boost revenue in a bid to deal with the escalating debt crisis.
In his 2023 budget presentation to parliament on Thursday, Ofori-Atta warned that the country was at high risk of a debt crisis and that the depreciation of the cedi was seriously affecting Ghana’s ability to manage its public debt.
The government is negotiating an aid package with the International Monetary Fund (IMF) as the country faces its worst economic crisis in a generation.