The Gold For Oil Policy will give Ghana room to accumulate more international reserves as the country will save $3 billion spent on oil imports, Vice President Dr Mahamudu Bawumai has said.
He explained that the use of gold is especially for oil imports when faced with reduced foreign exchange reserves.
“Unfortunately, the Vice President expressed concern that some people are misinterpreting the fact that Ghana is against the use of the US dollar in international transactions,” he said.
“Far from it. We want to accumulate more US dollar reserves in the future.
Dr Bawumia said the gold for oil initiative was effective after Ghana received its first shipment on Sunday, August 15, 2023.
So far, the Ministry of Lands and Natural Resources has announced that 40,000 metric tons of oil arrived at Tema port on Sunday, January 15, 2023.
The Ministry of Energy, Bulk Oil Storage and Transportation, and the Oil Marketing Company (OMC) will formulate a distribution and sale plan.
Speaking at the 74th annual school of the University of Ghana on Tuesday, January 17, 2023, Dr. Bawumia defended the policy saying that “How are we going to change all these ways of doing business on our natural resources? Take the case of gold in Ghana, we have mined gold more than 200 years, and when I looked at the data, I realized that the total gold reserves in Ghana will be only 8.7 tons by the end of 2021.
“One of the biggest gold mining countries, we are in the top 10 in the world but we have not accumulated gold to build reserves.
“We look at the other side of the balance sheet, we export gold and import oil. The cost of oil imports is about $ 3 billion per year. So the simple question is, why not, because we always get pressure to look for US Dollars to buy oil, it is better to get an agreement to exchange gold for oil, then sell oil in Cedis, then use Cedis to buy more gold, use the gold to pay for oil, sell oil in Cedis then no need to look for scarce foreign exchange to buy oil, which always leads to currency depreciation.
“With this idea, we say, let’s do something that is not taught in the textbook, let’s do something that is not in the box and that’s why we say gold for oil. We quickly saw this and we discussed with oil suppliers who were very excited and happy receive gold in payment Fortunately, yesterday, Monday, Ghana took the first oil in the gold-for-oil program.
“This is a cargo to test the framework to see if everything that has been put in will work and with the grace of God, it is clear that the framework will work and if it happens, we will save a lot of foreigners. exchange and reduce the pressure in our currency.
The Vice President continued that the main source of the depreciation of the Cedi has been the demand for forex to finance the import of oil products and to overcome this challenge, the government is negotiating a new privacy regime where sustainable mine gold will be used to buy oil products.
“We are implementing the gold-for-oil policy as envisioned, it will change the balance of payments and reduce the continuous depreciation of the currency with the increase in fuel, electricity, water, transport and food.”
He explained that because the exchange rate will not directly enter the formula for determining the price of fuel or utilities because all domestic fuel sellers no longer need foreign exchange to import oil products.
Source: dailyguidenetwork.com
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