The GOVERNMENT of Ghana is working on a new policy to buy oil with gold, instead of US Dollar reserves, to deal with the decrease in foreign currency reserves, the devaluation of the country's currency and to control inflation, which until September reached 37%.
The process will begin in January 2023.
Ghana's Vice President Mahamudu Bawumia has said that the move aims to deal with the decrease in foreign currency reserves as well as the demand for dollars from oil importers, which weakens the local cedi and increases the cost of living.
Ghana's gross international reserves reached $6.6bn at the end of September 2022, equivalent to less than three months of export insurance.
That's down from $9.7bn at the end of last year.
Elaborating further, Bawumia said "basically it will change payments and significantly reduce the devaluation of our currency."
He said using gold can prevent the exchange rate from directly affecting the price of oil or consumption as domestic sellers will no longer need foreign currency to import oil products.
"The exchange of gold for oil represents a major structural change," he added.
Ghana produces crude oil, but has been dependent on refined oil imports since its refinery closed due to an explosion in 2017.
In addition, Finance Minister Ken Ofori-Atta has announced measures to reduce spending and increase income in an effort to deal with the debt crisis that is increasing.
In the presentation of the 2023 budget in parliament on Thursday, Ofori-Atta warned that the West African nation was in serious danger of being hit by debt and that the depreciation of the cedi is seriously affecting Ghana's ability to manage its debt.