Ghana plans to purchase oil with gold as an alternative of {dollars} | Enterprise and Financial system Information


The transfer is geared toward tackling dwindling foreign exchange reserves amidst rising inflation and a weakening native foreign money.

Ghana’s authorities is engaged on a brand new coverage to purchase oil merchandise with gold relatively than US greenback reserves, Vice President Mahamudu Bawumia has stated on Fb.

The transfer, introduced on Thursday, is supposed to deal with dwindling international foreign money reserves coupled with demand for {dollars} by oil importers, which is weakening the native cedi and rising residing prices.

Ghana’s Gross Worldwide Reserves stood at round $6.6bn on the finish of September 2022, equating to lower than three months of imports cowl. That’s down from round $9.7bn on the finish of final yr, based on the federal government.

If applied as deliberate for the primary quarter of 2023, the brand new coverage “will essentially change our stability of funds and considerably scale back the persistent depreciation of our foreign money”, Bawumia stated.

Utilizing gold would forestall the change fee from immediately impacting gas or utility costs as home sellers would now not want international change to import oil merchandise, he defined.

“The barter of gold for oil represents a significant structural change,” he added.

The proposed coverage is unusual. Whereas international locations generally commerce oil for different items or commodities, such offers usually contain an oil-producing nation receiving non-oil items relatively than the other.

Ghana produces crude oil, nevertheless it has relied on imports for refined oil merchandise since its solely refinery shut down after an explosion in 2017.

Bawumia’s announcement was posted as Finance Minister Ken Ofori-Atta introduced measures to chop spending and enhance revenues in a bid to deal with a spiralling debt disaster.

In a 2023 funds presentation to parliament on Thursday, Ofori-Atta warned that the West African nation was at excessive danger of debt misery and that the cedi’s depreciation was severely affecting Ghana’s means to handle its public debt.

The federal government is negotiating a reduction bundle with the Worldwide Financial Fund because the cocoa, gold and oil-producing nation faces its worst financial disaster in a era.

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