Vice-President Dr Mahamudu Bawumia has announced government’s plans to use gold to purchase imported oil products.
Announcing the policy in a Facebook post, the vice president noted that the policy when implemented will fundamentally change Ghana’s balance of payments and significantly reduce the persistent depreciation of the cedi.
According to Dr. Bawumia, the policy shall be fully operational by the end of the first quarter of 2023 when its implementation is envisioned.
“The demand for foreign exchange by oil importers in the face of dwindling foreign exchange reserves results in the depreciation of the cedi and increases in the cost of living with higher prices for fuel, transportation, utilities, etc.
“To address this challenge, Government is negotiating a new policy regime where our gold (rather than our US dollar reserves) will be used to buy oil products,” he noted.
The vice president explained that the barter of sustainably mined gold for oil is one of the most important economic policy changes in Ghana since independence.
To that effect, he pointed out that it would potentially reduce the persistent depreciation of our currency with its associated increases in fuel, electricity, water, transport, and food prices.
“This is because the exchange rate (spot or forward) will no longer directly enter the formula for the determination of fuel or utility prices since all the domestic sellers of fuel will no longer need foreign exchange to import oil products.
“The barter of gold for oil represents a major structural change,” he stressed.
He also acknowledged the efforts of the Ministry for Lands and Natural Resources, Energy, and Finance, Precious Minerals Marketing Company, the Ghana Chamber of Mines and the Governor of the Bank of Ghana for their supportive work on the yet-to-start policy.
As part of measures to operationalise the government’s policy on the use of gold to purchase oil products, the Minister of Lands and Natural Resources, said all large-scale mining companies shall sell twenty percent (20%) of all refined gold at their refineries to the Bank of Ghana before export.
“Effective 1st January 2023, all large-scale mining companies (as agreed with the Bank of Ghana) shall sell twenty percent (20%) of all refined gold at their refineries to the Bank of Ghana (in Ghana Cedis) before the export of the gold. The Bank of Ghana and the Precious Minerals Marketing Company (PMMC) will coordinate with the large-scale mining companies to ensure compliance with this directive.
“Effective 1st January 2023, all Community Mining Schemes (CMS) shall sell their gold outputs to Government through PMMC. All mining licences for CMS shall include a clause mandating licensee to sell their gold output to Government,” it said in a statement issued by the Minister for Lands and Natural Resources, Samuel A. Jinapor.