Politics

Bawumia announces landmark new policy for Ghana to use gold to buy imported oil products

To stop the rapid depreciation of the cedi, Dr. Bawumia announced the policy change, which is anticipated to go into effect by the end of the first quarter of 2023.

He claims that using Ghana’s gold reserves rather than our dollar reserves to buy imported oil will help stabilize the raging cedi depreciation and its consequent spike in fuel, electricity, water, and transportation expenses.

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The demand for foreign currency by oil importers in the face of depleting foreign exchange reserves causes the cedi to weaken and raises the cost of living with higher costs for fuel, transportation, utilities, etc. In order to overcome this difficulty, the government is proposing a new system of policy under which oil goods will be purchased using our gold reserves rather than our US dollar reserves.

One of Ghana’s most significant economic policy reforms since independence is the bartering of responsibly mined gold for oil.

The Vice President continued: “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.

“The barter of gold for oil represents a major structural change. My thanks to the Ministers for Lands and Natural Resources, Energy, and Finance, Precious Minerals Marketing Company, and the Governor of the Bank of Ghana for their supportive work on this new policy.

“By the end of the first quarter of 2023, we anticipate that the new framework will be completely functioning. God bless Ghana, our country.

According to Finance Minister Ken Ofori-Atta, who delivered the 2023 Budget to Parliament on Thursday, November 24, the country’s public debt increased significantly from January to September 2022, primarily as a result of exogenous circumstances.

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