24.11.2022 Headlines

Bawumia endorses use of gold to buy oil products

Bawumia endorses use of gold to buy oil products
24.11.2022 LISTEN

Vice President Mahamudu Bawumia has given his full support to a proposed policy framework for the use of gold to buy oil products into Ghana.

The new policy framework is expected to be operational by the end of the first quarter of 2023.

He said the barter of gold for oil represented a major structural change of the economy.

In a post on his Facebook wall on Thursday, Dr Bawumia wrote: “The demand for foreign exchange by oil importers in the face of dwindling foreign exchange reserves results in the depreciation of the cedi and increases in the cost of living with higher prices for fuel, transportation, utilities, etc”.

“To address this challenge, the Government is negotiating a new policy regime where our gold (rather than our US dollar reserves) will be used to buy oil products.”

“The barter of sustainably mined gold for oil is one of the most important economic policy changes in Ghana since independence. If we implement it 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. ”

“This 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”.

He commended the ministers of Land and Natural Resources; Energy; and Finance, the Precious Minerals Marketing Company, and the Governor of the Bank of Ghana for their supportive work on the new policy.

“We expect this new framework to be fully operational by the end of the first quarter of 2023,” he added.

The cedi has experienced more than 54 per cent depreciation within the last 10 months, thereby negatively affecting the importation of petroleum products and other consumer items like rice, cooking oil, and tomato paste.