Ghana announces they will buy oil with gold instead of U.S. dollars

African nation Ghana has said that it plans to implement a new policy where it will purchase its oil with gold as opposed to US dollar reserves, Vice-President Mahamudu Bawumia confirmed on his Facebook on Thursday.

According to Reuters, the aim of this move is to tackle reducing foreign currency reserves coupled with demand for dollars by oil importers, which is weaking the Ghanaian currency, the cedi and driving up the cost of living.

If the plan is rolled out in first quarter of 2023, the new policy “will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency,” Bawumia said.

Bawunia said that by using gold, they would stop the exchange rate from affecting fuel and utility prices as domestic sellers would no longer require foreign exchange to import oil.

“The barter of gold for oil represents a major structural change,” he concluded.

Ghana produces an average of 176,000 barrels per day, according to data from September 2021. However, they still rely on others to refine the oil.

Bawumia’s posted his announcement as Finance Minister Ken Ofori-Atta put forward his own ideas to cut spending and increase revenue in an attempt to bring their spiraling debt crisis under control.

In a 2023 budget presentation to parliament on Thursday, Ofori-Atta cautioned that Ghana was at high risk of debt distress and that the cedi’s depreciation was seriously hindering Ghana’s ability to manage its public debt.