The move is aimed at solving the problem of dwindling foreign exchange reserves amid rising inflation and a weakening local currency.
Ghana’s Vice President Mahamudu Bawumia said on Facebook that the Ghanaian government is implementing a new policy to purchase petroleum products in gold instead of holding reserves in US dollars.
The move, announced Thursday, is intended to address dwindling foreign reserves coupled with oil importers’ demand for dollars, which is weakening the local cedi and raising costs. Living.
Ghana’s total international reserves stood at around $6.6 billion at the end of September 2022, equivalent to less than three months of imports. That’s down from about $9.7 billion at the end of last year, according to the government.
Bawumia said that if implemented as planned by the first quarter of 2023, the new policy “will fundamentally change our balance of payments and significantly reduce the continued devaluation of our currency.” I”.
He explained that using gold would prevent the exchange rate from directly affecting fuel or utility prices as domestic sellers would no longer need foreign exchange to import petroleum products.
“The exchange of gold for oil represents a major structural change,” he added.
The proposed policy is uncommon. While countries sometimes exchange oil for other goods or commodities, such transactions often involve an oil-producing country receiving a non-oil good, and not vice versa.
Ghana produces crude oil, but the country has depended on imports of refined oil products since its only refinery closed after an explosion in 2017.
Bawumia’s announcement comes as Finance Minister Ken Ofori-Atta announced measures to cut spending and boost revenue in an effort to tackle the growing debt crisis.
In a presentation on the 2023 budget to parliament on Thursday, Ofori-Atta warned that the West African nation was at risk of falling into debt and the devaluation of the cedi was having a severe impact on the economy. Ghana’s public debt management capacity.
The government is negotiating a bailout with the International Monetary Fund as the cocoa, gold and oil-producing nation faces its worst economic crisis in a generation.