The Vice President of Ghana, His Excellency Dr. Mahamadu Bawumia announced a new government policy

The latter part of last year 2022 witnessed series of drastic economic policy developments from the government of Ghana to combat the economic crisis the country was affected by such as COVID-19, Russia-Ukraine War amongst others.

On Friday,3rd of February 2023, the government released a statement to explain the policy and how it will be executed successfully. The government said, the payment would be done in two channels; barter trade or via forex obtained from selling gold to a broker.

“Both the Bank and the International Oil Trading Companies (IOTCs) are required to open Gold metal Accounts in a mutually agreed gold refinery for the purpose of gold transfer” this explains the policy under the Barter channel whereas “Gold broker buys the gold ore from BoG and deposits the proceeds in BoG gold holding account. BoG then transfers funds from gold holding account to an Escrow Account to pay for petroleum product shipment on receipt of QC and final invoice from BOST” this explains via forex obtained from selling gold to a broker.

The Vice President of Ghana, Dr. Mahamadu Bawumia in a Facebook post he made last year 2022 stated “I am happy to announce that the Government of Ghana has concluded the arrangements for the operationalization of the Gold for Oil Policy.

Consequently, the first oil products under the policy will be delivered next month (January 2023). My thanks to the Minister for Energy, Minister for Lands and Natural Resources, Governor of the Bank of Ghana, the Chamber of Mines, PMMC, NPA and BOST for their leadership in the operationalization of the Government’s Gold for Oil Policy.God bless our homeland Ghana.”

He stated emphatically in November 2022 that the Gold for Oil Policy was not another attempt by the country to move away from using the US dollar for international transactions but rather the program will give Ghana the space to accumulate more international reserves as the country will save the $3 billion it spends on oil imports into the country.

The Vice-President further explained that “ if we implement the gold for oil policy as it is envisioned, it will fundamentally change our balance payments and significantly reduce the persistent depreciation of our currency with its associated increases in fuel, electricity, water,transport and food prices”.

In view this new development, the Coordinator of The Third World Network Africa, Dr. Yao Graham, has opined in what he describes “the government’s gold for oil policy as merely a crisis management approach that shouldn’t be tagged as a profound innovation that somehow some generation of policy makers missed out on”.

He further asserted that “ based on the agreements that the large-scale mining companies have with the government, they know that the government can’t insist on buying all the gold because they have agreed to sell 20% of their production to the government “

He insisted that “the small-scale miners feel discriminated against because while the government intends to buy some of the goal produced by the large-scale mining companies, it intends to buy all the gold produced by the small-scale miners. There’s not even attention paid to the business model of small-scale mining companies”.

This policy like other policies proposed by the government must be critically assessed by policy makers and stake holders to ensure the country benefits immensely from its proceeds.