Ghana’s Vice President, Dr. Mahamudu Bawumia, has expressed optimism that the gold-for-oil initiative is the correct course for the country.
Ghana’s Vice President Dr. Mahamudu Bawumia says it is clear that the country’s gold-for-oil framework will work and that it will address the pressure around the country’s demand for forex exchange. Bawumia made the statement following the arrival of the first supply of oil in the country as reported by media outlet, Modern Ghana.
The gold-for-oil plan was first announced in November of last year, and was conceived in order to address the fact that Ghana’s Gross International Reserves stood at around USD 6.6 billion at the end of September 2022, equating to less than three months of imports cover. That is down from around USD 9.7 billion at the end of last year, according to the government.
“With this idea, we said, “Let us do something that the textbooks don’t teach you, let us do something that is out of the box”, so that is why we said gold-for-oil. We quickly looked at this and we negotiated with the suppliers of oil who were very excited and happy to receive gold in payment. Thankfully, yesterday, Monday, Ghana took its first delivery of oil under the gold-for-oil program.”
The first test
“This is the cargo to test the framework to see if everything that has been put in place will work and by the grace of God, it is clear that the framework will work and if that should happen we are going to save a lot of foreign exchange and reduce the pressure on our currency,” Dr. Bawumia said.
The Vice President shared this news while delivering a speech at the 74th annual New Year school of the University of Ghana yesterday.
Dr. Bawumia said, “Take the case of gold in Ghana, we have mined gold for over 200 years, and when I looked at the data, I realized that that our total reserves of gold in Ghana was just 8.7 tons at the end of 2021.
“One of the largest gold mining countries, we are in the top 10 in the world, but we have not accumulated gold to build our reserves.”
A simple question
The Vice President added, “We looked at the other side of the balance sheet, we export gold and import oil. The cost of oil import is about USD 3 billion a year. So we ask the simple question, “Why don’t we, since we have always got pressure in finding US Dollars to buy oil, reach an agreement to change our gold for oil and then, sell the oil on Cedis?” and then you don’t need to look for the scarce foreign currency exchange to buy oil, which always leads to depreciation on the currency.”
While the Ghana’s political opposition has voiced concerns over the gold-for-oil program, the government remains confident that this is the right course for the country.
Early last year, Ghanaian officials met with His Highness Sheikh Mohammed bin Rashid Al Maktoum to discuss how to improve bilateral trade between the UAE and Ghana. The latest available statistics placed precious metals, pearls, metal and coins as Ghana’s leading exports to the UAE, while the UAE exported vehicles and machinery to Ghana.