Gold bars has satisfied about 30% of the national consumption...

Ghana: When gold made it possible to supply oil up to 30% of national consumption

Ghana’s policy of paying for fuel purchases in gold bars has satisfied about 30% of the national consumption of crude oil since the beginning of the year, or 800.000 tonnes of gasoline and diesel oil.

This is what Minister of Lands and Natural Resources Samuel A. Jinapor told MPs last week, stating that the policy will be extended to soon reach 50% of national consumption.

In November 2022, Ghanaian Vice President Mahamudu Bawumia announced the government’s decision to pay for refined petroleum products in gold bars, instead of the US dollar. The measure aimed to safeguard the country’s foreign reserves and the rise of cedi, the local currency, in a context of inflationary pressures.

According to the comments of several local media outlets, the government has partially met these objectives, since the dollar is trading against 12 cedis in November 2023, while it took 17 cedis to get a dollar in November 2022.

However, the inflationary crisis is far from resolved, as the International Monetary Fund forecasts an annual headline inflation rate of 42.2% for 2023, up from 31.9% last year.

As a reminder, the gold used to pay for fuel purchases comes from a program set up at the Central Bank of Ghana. It consists of buying, in local currency and at spot price, 20% of the gold production of the major mining companies and all the production of small-scale and artisanal operators.

In addition to the fight against the depreciation of cedi, the measure has increased the Central Bank’s gold reserves, thus strengthening the role of the yellow metal in the Ghanaian economy.