Ghana’s Gold for Oil policy has contributed significantly to enhancing economic stability in recent times, the Governor of the Bank of Ghana (BoG), Dr Ernest Addison has said.
Speaking at the opening of the 4th Ghana Mining Expo in Takoradi on Friday, July 14, Dr Addison stated: “The introduction of the Gold for Oil policy has contributed significantly to economic stability. It has helped to stabilise prices, it has brought orderliness in the forex market and all of these have contributed to the improvement of the economic environment that we are seeing.”
The two-day Ghana Mining Expo 2023, held under the patronage of the Western Regional Coordinating Council, the Ministry of Lands and Natural Resources, and partners, provided a platform for players in the mining industry to explore the future of sustainable mineral resources development and the well being of mining communities.
Dr Addison commended President Nana Addo Dankwa Akufo-Addo, Vice President Dr Mahamudu Bawumia, and other stakeholders for contributing to the success of the policy.
Background of policy
The prime objective of the Gold for Oil policy is to use additional foreign exchange resources from the BoG’s Domestic Gold Purchase(DGP) programme to provide foreign currency for the importation of petroleum products for the country which stood at about $350 million per month.
Implementation of the policy commenced with the arrival of the first consignment of about 40,000 metric tonnes of diesel on January 15, 2023, valued at about $40 million. The policy seeks to ease pressure on the dollar (the currency used for the importation of petroleum products) and avoid the occasional increases in petroleum prices resulting from the depreciation of the cedi against the dollar.
Furthermore, the policy will ensure that the cost of importing the products from international oil traders is comparatively cheaper.
The policy is championed by Vice President Bawumia at the presidential level with the Energy Minister, Dr Matthew Opoku Prempeh being the anchor at the ministerial level
The Vice President has consistently drummed home the benefits of the Gold for Oil policy, insisting that the nation stands to benefit from its implementation.
According to him, the policy has stabilised the exchange rate and it is expected to save Ghana approximately $4.8 billion annually.
At the launch of the policy he stated. “This policy will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency.”
He postulated that gold would 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 stated.
Dr Opoku Prempeh has also not shelved his ministry’s determination to see to the realization of the full benefits of the policy.
He has declared that his ministry will monitor every link in the gold for oil value chain to ensure that the purposes for which the programme was birthed are not defeated.