‘Gold for crude oil’ move still being discussed, PMMC to play vital role in implementation – BoG Governor

• Posted on November 29, 2022November 29, 2022
• by Nana Kwesi Coomson
• Comment

The Precious Minerals Marketing Company (PMMC) will play a key role in the move to buy crude oil with gold, Governor of the Bank of Ghana (BoG) Dr Ernest Addison, has said.

The PMMC, he said, will be buying a lot of the gold from licensed gold exporters who he indicated, have significant amount of gold.

“The PMMC will be providing most of the gold to be used for crude oil swap,” he said during the Monetary Policy Committee (MPC) press conference in Accra on Monday, November 28.

Meanwhile, Vice President Dr Mahamudu Bawumia has stated that some analysts and commentators have misinterpreted Ghana’s stated policy of using gold reserves to pay for oil as an attempt by the country to move away from the US dollar for international transactions.

Speaking at the 2022 AGI Awards in Accra, Dr Bawumia noted that to the contrary, Ghana’s gold-for-oil programme will give Ghana the space to accumulate more international reserves as the country will save the $3 billion it spends on oil imports.

He further stated that the use of gold was specifically for oil imports in the face of declining foreign exchange reserves.

Unfortunately, some people have misinterpreted this as Ghana being against the use of the US dollar in international transactions,” he stated.

“Far from it. We want to accumulate more US dollar reserves in the future.”

Vice President Bawumia noted that a major source of Cedi depreciation has been the demand for forex to finance imports of oil products and to address this challenge, government is negotiating a new policy regime where sustainably mined gold will be used to buy oil products.

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

This, he noted, is because the exchange rate will no longer directly enter the formula for the determination of fuel or utility prices since all the domestic sellers of fuel will no longer need foreign exchange to import oil products

By Laud Nartey