Ghana plans to buy oil with gold instead of dollars

The transfer is geared toward tackling dwindling foreign exchange reserves amidst rising inflation and a weakening native forex.

The West African nation has warned it's dealing with its worst financial disaster in a era [File: Reuters]

Ghana’s authorities is engaged on a brand new coverage to purchase oil merchandise with gold somewhat than US greenback reserves, Vice President Mahamudu Bawumia has mentioned on Fb.

The transfer, introduced on Thursday, is supposed to sort out dwindling international forex reserves coupled with demand for dollars by oil importers, which is weakening the native cedi and growing residing prices.

Ghana’s Gross Worldwide Reserves stood at round $6.6bn on the finish of September 2022, equating to lower than three months of imports cowl. That's down from round $9.7bn on the finish of final 12 months, based on the federal government.

If carried out as deliberate for the primary quarter of 2023, the brand new coverage “will basically change our stability of funds and considerably cut back the persistent depreciation of our forex”, Bawumia mentioned.

Utilizing gold would stop the alternate price from instantly impacting gasoline or utility costs as home sellers would now not want international alternate to import oil merchandise, he defined.

“The barter of gold for oil represents a significant structural change,” he added.

The proposed coverage is unusual. Whereas nations typically commerce oil for different items or commodities, such offers usually contain an oil-producing nation receiving non-oil items somewhat than the other.

Ghana produces crude oil, however it has relied on imports for refined oil merchandise since its solely refinery shut down after an explosion in 2017.

Bawumia’s announcement was posted as Finance Minister Ken Ofori-Atta introduced measures to chop spending and increase revenues in a bid to sort out a spiralling debt disaster.

In a 2023 funds presentation to parliament on Thursday, Ofori-Atta warned that the West African nation was at excessive danger of debt misery and that the cedi’s depreciation was severely affecting Ghana’s potential to handle its public debt.

The federal government is negotiating a aid package deal with the Worldwide Financial Fund because the cocoa, gold and oil-producing nation faces its worst financial disaster in a era.