GHANA IS set to buy oil with gold rather than US dollars.
Vice President Mahamudu Bawumia said the government is working on a new policy to make it possible for gold to be used to purchase oil products instead of American currency.
The move is a response to a reduction in foreign currency reserves and the demand for dollars from oil importers, according to Reuters.
According to the government, Ghana’s Gross International Reserves were at around $6.6bn at the end of September 2022, which is less than three months cover.
This figure is down from approximately $9.7bn at the end of last year.
The new policy is expected to be implemented in the first quarter of 2023, which “will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency”, Mr Bawumia said.
Demands for US dollars is weakening the strength of the Ghanaian cedi and increasing the cost of living for citizens.
By using gold this would prevent the exchange rate from having a knock-on effect on fuel and energy prices as local sellers would not need foreign exchange to import oil and oil products, Mr Bawumia explained.
“The barter of gold for oil represents a major structural change,” he added.
Oil
The new policy is not very common as Ghana produces its own crude oil, but has heavily relied on imported refined oil products.
Ghana’s only oil refinery was closed following an explosion in 2017.
If the policy is successful, it could have a ripple effect on other African nations using their natural resources to trade.
