Gold has chosen; we can buy enough to sustain the ‘Gold-for-Crude’ program – BoG
The Director of Financial Markets at the Bank of Ghana (BoG) Stephen Opata has assured that the central bank can buy enough gold to ensure the continuation of the Gold-for-Crude program.
He said this on Monday, January 16, when he presented to the Public Accounts Committee (PAC).
“In terms of quantity, based on the amount of production we saw last year, gold has increased. We believe we can buy enough gold to sustain the program.
“I must say that the amount we are currently seeing is about 160,000 ounces per month and will represent about 50 to 60 percent of the country’s consumption. According to what PMMC has shown, I think we have the volume to support the program,” said Mr. Opata.
The Vice President, Dr Mahamdu Bawumia said the initiative was effective after Ghana received the first shipment on Sunday, August 15.
40,000 metric tons of oil arrived at Tema port on Sunday, January 15, 2023.
This was announced by the Ministry of Land and Natural Resources.
The Ministry of Energy, Bulk Oil Storage, and Transportation, and the Oil Marketing Company should formulate a distribution and sale plan.
Speaking at the 74th annual commencement of the University of Ghana on Tuesday, January 17, Dr Bawumia justified the programme.
He said, “How are we going to change all these ways of doing business regarding our natural resources? Take the case of gold in Ghana, we have been mining gold for over 200 years, and when I look at the data, I know that the total gold reserves in Ghana are 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 dollars a 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 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 textbooks, 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 that happens, we will save a lot of foreigners. exchange and reduce the pressure in our currency.
Dr. Bawumia’s previous program will give Ghana room to accumulate more international reserves as the country will save $3 billion spent on oil imports.
Furthermore, the use of gold is mainly for oil imports under the reduced foreign exchange reserves.
Unfortunately, some people misinterpret this as 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.
Vice President Bawumia noted that the main source of the depreciation of the Cedi is the demand for forex to finance the importation of oil products and to overcome this challenge, the government is negotiating a new policy regime where sustainably mined 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.”
This, he said, is 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.
By Laud Nartey|3news.com|Ghana
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