ACCRA, Ghana: Ghana's Vice-President, Mahamudu Bawumia, said on Facebook this week that due to dwindling foreign currency reserves, the country's government is drafting a new policy to purchase oil products using gold, rather than U.S. dollar reserves.
The move is also meant to deal with demands for dollars by oil importers, which is weakening Ghana's currency, the cedi, and increasing the cost of living.
According to the government, at the end of September 2022, Ghana's Gross International Reserves totaled some $6.6 billion, less than three months of payments for imports and down from some $9.7 billion at the end of last year.
If implemented as planned during the first quarter of 2023, the new policy "will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency," Bawumia said.
He added that as domestic sellers would no longer need foreign exchange to import oil products, using gold would prevent the exchange rate from directly impacting fuel or utility prices.
Since its only refinery shut down after an explosion in 2017, Ghana has relied on imports for refined oil products, despite being a crude oil producer.
In an effort to tackle a spiraling debt crisis, Ghana's Finance Minister, Ken Ofori-Atta, also announced measures to cut spending and boost revenues.
As the cocoa, gold and oil-producing country is facing its worst economic crisis in a generation, the Ghanian government is negotiating a relief package with the International Monetary Fund.