Ghana’s Vice President Mahamudu Bawumia on Thursday said the government is planning to undertake a new policy regime where it will use gold to buy oil products rather than U.S. dollar reserves, reported The Reuters.
In a Facebook post, Bawumia said the new policy will fundamentally change the country’s balance of payments and significantly reduce the persistent depreciation of the Ghanaian cedi.
He explained that using gold would prevent the exchange rate from directly impacting fuel or utility prices as domestic sellers would no longer need foreign exchange to import oil products.
“The barter of gold for oil represents a major structural change,” he added.
The government’s planned move is meant to tackle dwindling foreign currency reserves coupled with demand for dollars by oil importers, which is weakening the local cedi and increasing living costs.
Notably, Ghana’s Gross International Reserves stood at around $6.6 billion at the end of September 2022, which equals to less than three months of imports cover. The international reserves was down from around $9.7 billion at the end of last year, according to the official government data.
In related news, Ghana’s Finance Minister Ken Ofori-Atta said on Thursday the government will freeze the hiring of public and civil servants and extend a moratorium on government car purchases and non-essential travel in order to tackle a spiralling debt crisis.
While presenting Ghana’s 2023 budget in parliament, Ofori-Atta said the West African country was at high risk of debt distress and has agreed on a debt management strategy with the International Monetary Fund (IMF).
Ofori-Atta did not announce any cuts to expenditure on government’s flagship programmes, however, and detailed a range of wider infrastructure and social investment.
He said the government is in talks with the IMF for a relief package as the cocoa, gold, and oil-producing nation faces its worst economic crisis in a generation.
