ACCRA (Reuters) -Ghana's government is working on a new policy to buy oil products with gold rather than U.S. dollar reserves, Vice-President Mahamudu Bawumia said on Facebook on Thursday.The move is meant to tackle dwindling foreign currency reserves coupled with demand for dollars by oil importers, which is weakening the local cedi and increasing living costs.
Ghana's Gross International Reserves stood at around $6.6 billion at the end of September 2022, equating to less than three months of imports cover. That is down from around $9.7 billion at the end of last year, according to the government.
If implemented as planned for the first quarter of 2023, the new policy "will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency," Bawumia said.
Using gold would prevent the exchange rate from directly impacting fuel or utility prices as domestic sellers would no longer need foreign exchange to import oil products, he explained.
"The barter of gold for oil represents a major structural change," he added.
The proposed policy is uncommon. While countries sometimes trade oil for other goods or commodities, such deals typically involve an oil-producing nation receiving non-oil goods rather than the opposite.
Ghana produces crude oil but it has relied on imports for refined oil products since its only refinery shut down after an explosion in 2017.
Bawumia's announcement was posted as Finance Minister Ken Ofori-Atta announced measures to cut spending and boost revenues in a bid to tackle a spiraling debt crisis.
In a 2023 budget presentation to parliament on Thursday, Ofori-Atta warned the West African nation was at high risk of debt distress and that the cedi's depreciation was seriously affecting Ghana's ability to manage its public debt.
The government is negotiating a relief package with the International Monetary Fund as the cocoa, gold and oil-producing nation faces its worst economic crisis in a generation.
https://finance.yahoo.com/news/ghana-plans-buy-oil-gold-150718243.html ....
It seems the FOREX exchange rate between the US dollar and native ghana ceti is widening. Ghana is opting to purchase refined oil products using gold, to avoid losses associated with a strong dollar and their weakening native currency. I'm not certain if that can accurately be labeled a decline of the petro dollar. That may be a clickbait headline moreso than an accurate one.
While many nations have sought to implement so called "de dollarization" strategies over the years. Ghana's motive here appears to be avoiding FOREX exchange rates rather than de coupling from the US dollar.
But it does raise a question of whether economies of foreign nations are also being hurt by exchanges rates as the US dollar remains strong on FOREX markets, while other currencies devalue.
