The government has announced plans to use gold to purchase imported oil products, according to a latest Facebook post by Vice-President Dr Mahamudu Bawumia.
The policy when implemented will fundamentally change Ghana’s balance of payments and significantly reduce the persistent depreciation of the cedi.
Bawumia said the policy, which is still at the negotiation stage will come into force by the second quarter of 2023.
“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.” he said.
He added: “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. The barter of sustainably mined gold for oil is one of the most important economic policy changes in Ghana since independence.”
Meanwhile, as part of measures to operationalise the government’s use of gold to purchase oil products, the Minister of Lands and Natural Resources, Samuel A Jinapor has just issued the following directives:
“1. Effective 1 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.
2. Effective 1 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 licensees to sell their gold output to Government.
3. Effective 1 January, 2023, all Licensed Small Scale Gold Miners shall sell their gold to Government through PMMC. All small scale gold mining licences shall include a clause mandating licensees to sell their gold to Government.
4. The gold to be purchased by the Bank of Ghana and the PMMC will be in cedis at spot price with no discounts.
These directives would also help local gold refineries obtain gold supplies from PMMC to support their operations as they work toward obtaining the required London Bullion Market (LBMA) certification.
God Bless our homeland Ghana