Vice President Dr. Mahamudu Bawumia has stated that some analysts and commentators have misinterpreted Ghana’s stated policy of using gold reserves to pay for oil as an attempt by the country to move away from the US dollar for international transaction.
Speaking at the 2022 AGI Awards in Accra, Dr. Bawumia noted that to the contrary, Ghana’s gold-for-oil programme will give Ghana the space to accumulate more international reserves as the country will save the $3 billion it spends on oil imports.
He further stated that the use of gold was specifically for oil imports in the face of declining foreign exchange reserves.
“Unfortunately, some people have misinterpreted this as Ghana being against the use of the US dollar in international transactions,” he stated.
“Far from it. We want to accumulate more US dollar reserves in the future.”
Vice President Bawumia noted that a major source of Cedi depreciation has been the demand for forex to finance imports of oil products and to address this challenge, government is negotiating a new policy regime where sustainable mined gold will be used to buy oil products.
“If we implement the gold-for-oil policy as it is 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, he noted, is because the exchange rate 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.