The Black Gold

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Ghana is planning to buy oil with gold rather than its US dollar reserves, a move aimed at tackling the West African country’s dwindling currency reserves as it grapples with economic upheaval, Reuters reported.

Vice President Mahamudu Bawumia said the new policy “will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency.”

He explained that using gold would prevent the falling exchange rate for the Ghanaian cedi currency from having a direct impact on utility prices, because domestic sellers would no longer require foreign currency to buy oil products.

The government plans to implement the new payment method in the first quarter of 2023.

Observers said the plan is unusual because oil-producing nations usually trade their fossil fuel for non-oil goods rather than the opposite.

Although Ghana produces crude oil, it has relied on imports of refined oil products after its only refinery shut down in 2017 following an explosion.

Meanwhile, the country’s Gross International Reserves were valued at roughly $6.6 billion at the end of September 2022, representing less than three months’ worth of imports. This was a steep drop from roughly $9.7 billion at the end of last year.

Amid fears of a spiraling debt crisis and depreciating currency, the government has introduced a series of measures to cut spending and boost revenues.

The resource-rich nation is also negotiating with the International Monetary Fund for a relief package as it handles its worst economic crisis in a generation.