According to the vice president, the situation and the quest to find a workable solution around it left him sleepless.
“One moment which gave me a lot of sleepless nights personally was when at one point, the forward exchange rate of GH¢19 to the dollar was used to price fuel at the pump,” Dr Bawumia stated during the commissioning of the new head office of the Bulk Oil Storage Transportation Company in Accra on Wednesday, March 15, 2023.
“We were faced with how much higher it could go. We were faced with a very critical situation because we didn’t have enough foreign exchange reserves to meet this persistent demand.
“Today, you are seeing that in Kenya, they are facing significant shortage of foreign exchange reserves resulting in petroleum queues.
“So, we had to think outside the box to prevent Ghana from going through that situation… and this is where the thinking for gold-for-oil came in,” the vice president added.
The head of Government’s Economic Management Committee, however, noted that the quest to find a solution led to the conception of the government’s Gold-for-Oil policy.
Touting the policy as the most important macroeconomic policy in the history of the country relative to the exchange rate, fuel and food pricing, the vice president emphasised that the policy is already achieving its intended results just three months after its implementation.
"In my humble opinion, it is the most important macro-economic policy intervention to deal with the exchange rate depreciation, fuel price, and food price issues that we have had.
"We have not only seen a decline in prices of fuel from GH¢23.00 per litre to around GH¢12, but we have also seen stability in the exchange rate," he noted.
Among other things, the vice president noted that the country will make an annual savings of some US$4.8 billion in foreign exchange when the policy is optimised to cover 100% of the country’s foreign imports by the end of the year as projected.
“I’ve been told that next week we are likely to see a reduction in fuel prices and next week is actually not far. It is tomorrow. Tomorrow we will see the decline in prices that we expect. This is remarkable. Two and a half months ago you were at 23 cedis and today you are at 12 cedis per litre and falling. That is a good point.
“But let me note that the most important aspect of the Gold-for-oil policy is not just the reduction in fuel prices. But the most important aspect is the savings in foreign exchange that the Bank of Ghana will make as a result of the lower demand for forex to import oil.
"That saving is huge, we are currently importing about 50 to 60 percent of oil under this policy, the goal is to move to 100% and that will be done this year,” the vice president stated while commissioning a new head office for the state-owned Bulk Oil Storage and Transportation Company Limited (BOST).
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About the Gold-for-oil policy
Last year, Dr. Bawumia announced a new government policy dubbed gold-for-oil. The policy, as explained by the government, is to allow the government to pay for imported oil products with gold, in a direct barter with gold purchased by the Central Bank.
