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Gold For Oil Will Boost Our US Dollar Reserves – Bawumia

Source The Ghana Report

Vice President Dr Mahamudu Bawumia is optimistic that the policy to exchange gold with oil will shore up Ghana’s US dollars to boost the local currency.

Addressing dignitaries at the 2022 Association of Ghana Industries (AGI) Awards in Accra, he explained that Ghana’s gold for oil would rather allow the country to accumulate more international reserves as it will save the $3 billion it spends on the importation of oil.

He further stated that the barter trade system would only apply to gold and the oil exchange.

“Unfortunately, some people have misinterpreted this as Ghana being against the use of the US dollar in international transactions. Far from it. We want to accumulate more US dollar reserves in the future,” Dr Bawumia explained.

Again, Dr Bawumia indicated that the major source of the cedi depreciation is due to the higher demand for the US dollar for the importation of goods into the country.

Hence, “the government is negotiating a new policy regime where mined gold will be used to buy oil products”.

“If we implement the gold for oil policy 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.”

He noted, “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”.

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