Vice-President Mahamudu Bawumia said on Facebook on Thursday that the government of Ghana is developing a new strategy to purchase oil goods using gold rather than U.S. dollar reserves.
This is being done to combat the local cedi’s depreciation and the rising cost of living caused by declining foreign exchange reserves and the need for dollars from oil importers.
At the end of September 2022, Ghana’s gross international reserves were estimated to be around $6.6 billion, or less than three months’ worth of imports. According to the government, that is a decrease from the $9.7 billion it was at the end of the previous year.
If implemented as planned for the first quarter of 2023, the new policy “will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency,” Bawumia said.
Because domestic vendors would no longer require foreign exchange to import oil products, using gold would prevent the exchange rate from having a direct impact on the cost of fuel or utilities, he said.
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Ghana produces crude oil, but since its sole refinery was forced to close due to an explosion in 2017, it has been dependent on imports for refined oil products.
The country is facing a major economic crisis and it is negotiating a relief package with the International Monetary Fund.