Dr Gideon Boako writes;
On the “GOLD 4 OIL” Programme: The Key Points
This policy is basically going to be government to government transaction. Government of Ghana (GoG) will buy gold locally with cedis through PMMC and Bank of Ghana (financier).
Purchased gold will be in government vault at Bank of Ghana.
GoG will then exchange the gold for fuel (oil) in a bater form from for example, the government of UAE.
This does two things:
- First, the significant drain on the forex is from oil imports. Once u lock that tunnel you are good on the fx side. The gold purchase for stocking will still be in place. It is a matter of increasing your gold purchases and some arrangement has been made with the miners in that respect. Oil imports in this case will be done directly by Government instead of the Oil Marketing Companies (OMCs). They (OMCs) always buy USD from BoG thereby reducing the stock of the country’s foreign reserves, with the corollary effect on the cedi’s depreciation.
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Second, the OMC’s price the oil they sell to the local market with a huge exchange rate factor. Currently they use 19 cedis to the dollar in the pricing. Once we do this bater, the exchange rate component in the pricing will be eliminated and that in itself can bring down the cost of a litre of fuel by about 4 to 5 cedis.
The policy helps us to address the issue of high fuel cost and substantial/persistent depreciation of the cedi.
