Vice President of Ghana Mahamudu Bawumia has said that in order to protect the country’s fast-dwindling foreign currency reserves, Ghana wants to pay for oil with gold instead of U.S. dollars.
The move is meant to tackle dwindling foreign currency reserves coupled with the demand for dollars by oil importers, which is weakening the local cedi and increasing living costs.
Bawumia explained that “using gold will 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 West African country has been facing one of its worst economic crises.
Ghana’s gross international reserves have fallen by about one-third – from $9.7 billion at the end of 2021 to around $6.6 billion at the end of September 2022, according to official data. Ghana produces crude oil, but it has relied on imports for refined oil products since its only refinery shut down after an explosion in 2017.
He said six plants were being set up in the various regions to process mineral resources deposited in those regions.
In Ghana, Artisanal and small-scale mining – a low-tech, indigenous mining subsector supports millions and contributes up to 43% of the nation’s total gold production.