Debt-ridden Ghana plans to buy oil with gold instead of dollars as foreign exchange reserves fall dangerously low


  • The government of Ghana plans to use gold to pay for oil instead of spending US dollars.
  • The move is expected to ease the “steady depreciation” of Ghana’s currency, the cedi.
  • At the end of September, Ghana’s foreign exchange reserves were enough to cover 3 months of imports.

The government of Ghana plans to return to the barter system.

Ghana wants to pay for oil with gold instead of spending precious US dollars, the country’s vice president Mahamudu Bawumia said Thursday, to protect the country’s rapidly dwindling foreign exchange reserves.

According to official figures, Ghana’s gross international reserves will fall by almost a third from $9.7 billion at the end of 2021 to about $6.6 billion at the end of September 2022.

The stockpile will cover just 2.9 months of the country’s imports of goods and services — short of the government’s target of covering three and a half months of imports for 2022, according to a copy of the country’s budget speech, held by Finance Minister Ken Ofori-atta on Thursday.

The government of Ghana plans to introduce a “new policy regime” in the first quarter of 2023 on the use of gold to buy oil products to counter inflation caused by the depreciation of the Ghanaian currency cedi. Bawumia pointed out in a Facebook post on Thursday that the cedi fell against the US dollar on strong demand for the greenback from oil importers.

By not using the US dollar in the country’s oil trade, the move is expected to reduce the cedi’s “ongoing depreciation” as fuel sellers in the country do not factor in the dollar-cedi exchange rate when determining Prices. Will happen. their products, he said.

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Ghana’s oil-for-gold policy is unusual in that it is an oil producer itself. However, it still has to import refined oil products such as gas and diesel as Ghana’s only oil refinery went offline after an explosion in 2017, Reuters reported.

This is even more unusual, as barter transactions usually involve an oil-producing country trading in non-oil commodities.

But Ghana – which also produces gold – is in a debt crisis and is negotiating an aid package with the International Monetary Fund.

Finance Minister Ofori-Atta said in his speech on Thursday that the country was “at high risk of a debt crisis” as the depreciation of the CDI “seriously affected” its ability to manage its national debt. The cedi has lost more than half its value against the US dollar so far this year.




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