Vice President Dr. Mahamudu Bawumia has given a good reason for the "Gold-for-Crude" program.
He said that it is a creative way to help the local currency do better against the major trading currencies, especially the Dollar.
On Tuesday, January 17, he talked about the program at the University of Ghana's 74th annual new year school. He said, "How are we going to change this whole way of doing business when it comes to our natural resources? Take the case of gold in Ghana. We've been mining gold for more than 200 years, but when I looked at the numbers, I saw that our total gold reserves at the end of 2021 were only 8.7 tonnes.
"We are one of the top 10 countries that mine gold, but we haven't saved up enough gold to build up our reserves.
"We looked at the other side of the balance sheet and saw that we export gold and import oil. The cost of getting oil from other countries is about $3 billion a year. So we ask the simple question: Since we always have trouble finding US Dollars to buy oil, why don't we just agree to trade our gold for oil, sell the oil in Cedis, and then use the Cedis to buy more gold, use that gold to pay for oil, sell the oil in Cedis, and then you don't have to look for the scarce foreign exchange to buy oil, which always causes the currency to drop.
"When we came up with this idea, we said, "Let's do something that textbooks don't teach you, let's do something outside the box," which is why we came up with the term "gold-for-oil." We looked at this quickly and negotiated with the oil suppliers, who were thrilled to get gold as payment. Thanks to the gold-for-oil program, Ghana finally got its first shipment of oil on Monday.
"This is the cargo to test the framework to see if everything that has been set up will work. By the grace of God, it is clear that the framework will work, and if that happens, we will save a lot of foreign exchange and reduce the pressure on our currency."
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